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COVID-19 Pandemic Severely Reduces Workers’ Income

ByMicheal Johnson

Sep 23, 2020

According to the report “COVID-19 and the world of work”, The loss of working hours on a global scale during the first nine months of the year was“ substantially greater ”than that predicted in the previous edition of the study.

The document details that the revision of the estimates of lost working hours worldwide for the second quarter of this year compared to the fourth quarter of last year, indicate that there was a decrease of 17.3%, equivalent to 495 million jobs. full-time. The initial projection was 14%.

For the third quarter of this year, a slight improvement is expected with the loss of 12.1% of working hours worldwide, while for the fourth the figure would be 8.6%. This result would represent an increase of 4.9% compared to the previous ILO forecast.

The upward revision of lost working hours is due to the fact that workers in developing and emerging economies, particularly in the informal sector, have been much more affected than in previous crises.

At the same time, the reduction in employment is attributed “to a greater extent to the degree of inactivity than to the level of unemployment, which has broad consequences for policy adoption”.

Big drop in income

“During the first three quarters of 2020, Global income from work has decreased by around 10.7% to 3.5 trillion dollars compared to the same period in 2019“, Highlights the body that specifies that the figure” does not include the effects of the measures adopted by governments to support the level of income. “

The largest drop in earnings from work occurred in lower-middle-income countries, where it reached 15.1%, while the most affected region was America, where a loss of 12.1% was recorded.

Aid packages, only for rich countries

The report also analyzes the effectiveness of tax incentives to mitigate the effects of COVID-19 on the labor market and finds that, the greater the scope of these measures, the lower the loss of work hours recorded.

Although these provisions helped to stimulate economic activity and mitigate lost working hours, they have been applied primarily in high-income countries, “given the limited resources of emerging and developing countries to finance these measures.”

For developing countries to achieve the same relationship between the value resulting from the application of tax incentive measures and that associated with lost working hours that exists in high-income countries, they would have to invest an additional $ 982 billion ( $ 45 billion for low-income countries and $ 937 billion for lower-middle-income countries).

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