The Unemployment Crisis
As the novel Coronavirus epidemic claims thousands worldwide, another sector takes even harsher hits; the global job market. The global unemployment staggering numbers are soaring unprecedentedly at a historic rate. The COVID-19 outbreak quickly put on a new show as it left the global health crippled and distraught at its feet. It turned into a vicious economic nightmare battering the business sector, with millions of people hanging unemployment due to social distancing and home-stay ordered by many governments.
Today, the highly infectious virus has ripped 25 million people worldwide of their jobs and sent them into their houses, with some lucky enough to avoid the crisis. The International Label Organization (ILO) announced the draw-dropping surge with a “low” estimation rate of 5.3 million unemployed if the countries act quickly and accordingly.
In comparison to the 2008-09 hectic global financial recession, which left 22 million across the world without a job, the coronavirus has already surpassed expectations and has taken the lead in escalating unemployment rates.
Despite the depressing job-losses, the U.N. body announced the tally can be shrunk down to a lower number than 5.3 million provided that nations can break the chain of infection and eventually defeat the coronavirus spread. If the economic fallout from the virus isn’t restrained, however, the outcome could be devastating. The ILO estimates income losses for workers to rise to $3.4 trillion (€3.1 trillion) as more and more countries enforce lockdowns and enforce social distancing rules. Of course, not all jobs can be done from the comforts of a home setting.
This is terrible news for already-wavering global manufactures and businesses who had to continually struggle with the destructive aftermaths of Chinese-American tariff wars and global economic slowdowns. In consequence, we’re witnessing organizations letting off workers and handing them pink slips.
Hardest Hit Sectors
Travel, Tourism, and Subsidiary Industries
The airline companies — smashed hardest by COVID-19 — received the first and most destructive hits among other industries. As a precaution to break the infection chain, airlines and travel agencies were first to get off the blocks as global travel bans were issued by countries. This was a preventive measure to contain the virus, which ended in them holding flights and tours and grounding thousands of airplanes or travel buses. Air Canada, Scandinavian Airlines and Norwegian Air have announced plans to collectively layoff more than 20,000 employees.
The situation is even direr when we focus on the European job market, which has long suffered from price disagreements and overcapacity. The weaker airlines working throughout this economically challenging continent are facing a life-and-death threat as they find it more challenging to balance out their sheets and meet up with their expenditures so they can survive the pandemic. Some European airlines like British carrier Flybe have already closed the curtains and folded up.
When we talk about travel and tourism being hit, a lot of subsidiary industries bleed out alongside them, too, like the hospitality industry. The industry (hotels, motels, hosting agencies, and startups) are also struggling to cope with the sweeping containment measures. Marriot, the world’s largest hotel company, and other major hotel chains such as Hilton and Hyatt are letting go of tens of thousands of employees, which contributes to the negative unemployment rates in Europe. Also, Scandic, Sweden’s biggest hotel group, announced it would issue pink slips to 2,000 Swedish workers since the industry is hitting rock bottoms.
“It’s just the beginning, we could see huge manufacturing industries closing simply because they can’t get the parts that they need within the global supply chain to produce what they are supposed to produce. So, we could see massive companies closing down,” Schmidt-Klau said. “Tourism might be the first one to be hit the hardest. But it’s certainly not going to be the only one.”
COVID-19, An International Crisis
Unemployment Rates in United States
Over 6.6 million people in the U.S. have filed for unemployment benefits in the light of the coronavirus crisis during the last week. Long lines have distraught every-day routines at the unemployment offices while the phone lines are jammed or temporarily disabled, and official websites collapsed under the unpredicted wave of visitors submitting their applications.
Being at the mercy of the virus, unemployment rates in America have ratchet up from 3.5% in February up to 17% in two weeks. U.S. jobless claims soared tremendously in the last week, a record of 3.3 million waiting in lines – more than 4 times the previous peak in 1982 – to be compensated for their time off work.
Federal Reserve Bank of St. Louis President James Bullard anticipated virus containment measures may send the U.S. unemployment rate soaring to 30% in the second quarter with an unprecedented 50% drop in the gross domestic product, Bloomberg reported.
A Moody’s Analytics’ report showed that 27 million people, or about 18% percent of total U.S. jobs, work for “industries whose revenues are severely curtailed, and are vulnerable to layoffs, as businesses, particularly smaller firms, run down their cash and credit lines.” It named leisure and hospitality, transportation and employment services among the sectors most at risk. Health care and government sectors were among the least vulnerable.
Unemployment Rates in Germany
Experts estimate the eradication of millions of jobs as European giants like Spain, Italy, Germany, and France close their borders and impose strict anti-pandemic rules.
Ifo, the German research institute reported that the epidemic outbreak could eliminate over 1.4 million full-time jobs and force another 6 million employees to take part-time positions in a desperation move.
“The crisis is causing massive distortions in the labor market that are worse even than conditions at the height of the financial crisis,” Ifo President Clemens Fuest said.
Deutsche Bank economists said the euro area unemployment rates could jump to as much as 13-19% compared with a high of 12% seen following the global economic crisis.