How Covid-19 changed the labor market in the world
8 January 2021
The coronavirus pandemic was primarily responsible for causing a global health crisis but it has quickly transformed into a labor market and economic problem as well. It has led to a worldwide job crunch of an unprecedented magnitude. As the massive pandemic keeps on evolving with little sign of relief all the assessments about the condition of the labor market are subject to uncertainty. It is even more uncertain to predict future developments in the labor markets.
However, it is critical to monitor and analyze the impact of the pandemic on the labor market to help various countries create a timely and informed policy response to the situation.
Lessons from the 2008 great recession
One of the significant takeaways from the great recession of 2008 was inadequate recovery measures. The policy responses from the mainstay were characterized by trickledown measures and it resulted in a sluggish recovery of the economy and resulted in greater political and social uncertainty. It resulted in a slow and painful recovery in the case of employment and labor income. This resulted in further slowing down of the economy and an almost depressing growth in productivity. It took in the excess of a decade for global unemployment to return to normal. The youth unemployment actually never returned back to normal. Although there are several other reasons that contributed to the slow recovery, the sluggish measures were mainly attributed to the failure for a fast recovery. These mistakes should not be repeated for the current pandemic.
The scale of disruption in the labor market
Everyone is interested in knowing the magnitude of disruption of the labor market. The standard models used to predict unemployment in 2020 are insufficient and in many cases misleading. The averages will not reflect the reality of the situation. Unemployment figures will not reflect the scale of disruption for the employees because many people will keep their jobs although not working. Some people who lost the job will not continue to look for new jobs so this figure will also not appear in the analysis. People working for a shorter duration are counted as employees but they will not appear in the figures for unemployment either. Although the unprecedented scale of disruption in the market is affecting everyone and all countries, the actual impact has been disproportionate making certain segments of the workforce more vulnerable to the situation.
Workers from the informal economy at a greater risk
There is a total workforce of 3.3 billion people working worldwide out of which 2 billion are working in an informal economy. Migrant workers and women are more vulnerable to the situation. 80% of the people working in the informal economy are likely to get significantly impacted by the pandemic. There is likely to be a massive impact on the income and poverty levels of workers. It is expected that the income of informal workers is likely to decline by 60% in the first month of recovery. This figure is likely to be more for America and Africa. It is expected that the relative poverty levels around the world will be pushed higher by the pandemic.
Policy and outlook challenges
It is expected that the social and economic impact of the pandemic will fade away in the second half of 2020. But things may not turn out that way if the number of infected members rises again in some countries. This is because the governments will be forced to impose lock-downs at least partially. Despite the massive financial interventions from various governments, several businesses and jobs will be lost for good. There is likely to be lasting damage left by the pandemic on the labor market and the difficult conditions that will prevail henceforth mean there is a need for sustained support to maintain recovery.
COVID-19 and call centers
In order to thrive in the post-COVID-19 scenario, all call centers will have to accept elevated communication levels of using the phone channels. The inbound call center services will be required to adopt a line of communication that is scalable to a great extent and can be powered by high-level automation, top-level security, and one that supports human operators. It is an innovative technology that was once considered to be a nice-to-have facility but now it has become an absolute must-have requirement.