Updated: September 24, 2020 12:12:16 pm
Global labour income, including wages for employees and part of income for the self-employed, is estimated to have declined by 10.7 per cent or $3.5 trillion during the first nine months of 2020. This is equivalent to 5.5 per cent of global GDP for the first nine months of 2019, the International Labour Organization (ILO) said on Wednesday.
This estimated loss of labour income excludes income support provided through government measures. The drop is higher for lower-middle income countries, with the labour income losses estimated to be 15.1 per cent, followed by 11.4 per cent in upper-middle-income countries and 10.1 per cent in low-income countries. Workers in high-income countries are estimated to have lost labour income of 9.0 per cent.
“In total, the global loss in labour income during the first three quarters of 2020 amounts to US $3.5 trillion (using 2019 market exchange rates), which is equivalent to 5.5 per cent of global GDP for the first three quarters of 2019. When those significant losses are not mitigated by other sources of income, such as social protection transfers, they can push households into poverty while reducing aggregate demand,” the ILO said.
Global working-hour losses are now projected to be 8.6 per cent in the October-December quarter, which corresponds to 245 million full-time equivalent jobs. This is 75 per cent higher than the ILO’s previous estimate of 4.9 per cent or 140 million full-time equivalent jobs.
One of the reasons for the estimated increases in working-hour losses is that workers in developing and emerging economies, especially those in informal employment, have been much more affected than by past crises, it said.
The ILO said that among countries with sufficient data, a clear correlation can be seen: the larger the fiscal stimulus (as a percentage of GDP), the lower the working-hour losses in the April-June quarter of 2020.
So, on average, an increase in fiscal stimulus by 1 per cent of annual GDP would have reduced working-hour losses by 0.8 percentage points in April-June. To put this into perspective, the estimated working-hour losses would, on average, have been as high as 28 per cent if no fiscal stimulus had been implemented, the ILO said.
“This also suggests that the comparatively smaller stimulus programmes in low-and middle-income countries may account for at least part of the large working-hour losses estimated for those countries,” it said.
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