ILO Downgrades Forecast for Labour Market Recovery in 2022; Full Recovery not Possible Even in 2023

Because of the COVID-19 pandemic’s impact on economy, the world will see a deficit of hours worked that is equivalent to 52 million full-time jobs in 2022, relative to the fourth quarter of 2019 (pre-pandemic), according to a recent projection by the International Labour Organization (ILO).

Downgrading its forecast for labour market recovery in 2022, the ILO report projected that global hours worked in 2022 will remain almost 2% below their pre-pandemic level when adjusted for population growth.

“The global labour market outlook has deteriorated since the ILO’s last projections; a return to pre-pandemic performance is likely to remain elusive for much of the world over the coming years,” the ‘ILO World Employment and Social Outlook – Trends 2022,’ said.

In the previous edition of World Employment and Social Outlook, published in June 2021, the shortfall in working hours relative to the fourth quarter of 2019 was projected to narrow to less than 1% in 2022.

Even though pandemic-induced labour market disruptions will create working-hour deficit amounting to 52 million full-time jobs, this figure is a significant improvement on 2021, when hours worked (adjusted for population growth) were deficient in equivalence to 125 million full-time jobs (assuming a 48-hour working week), in relation to the fourth quarter of 2019. However, the report adds that the 52-million figure is still “extremely high”.

The ILO further said that the COVID-19 pandemic’s impact on economies worldwide has resulted in “developed economies recouping significant elements of their employment and income losses, while emerging and developing countries continued to struggle with the labour market fallout of workplace closures and weak economic activity.”

Moreover, the global unemployment is projected to stand at 207 million in 2022, exceeding its 2019 level by around 21 million.

The ILO expects global unemployment to remain above pre-pandemic levels until at least 2023. It also expects the recovery of labour demand to pre-crisis levels to take time, which will result in slowed growth in employment and working hours.

Employment losses and reductions in working hours have led to reduced incomes, with workers having insufficient incomes and their families draining out their savings. The impact is worse on developing countries, where, in the absence of comprehensive social protection systems, the financial stress of already economically vulnerable households, has compounded with cascading effects on health and nutrition, the report said.

The key labour market indicators in all regions have yet to return to pre-pandemic levels, the report said. The ILO’s projections for 2023 suggest that a full recovery will remain elusive.

The European and Pacific regions are projected to come closest to a full recovery while the outlook is the most negative for Latin America, the Caribbean and South-East Asia. However, all regions face severe downside risks to their labour market recovery that due to the ongoing impact of the pandemic, the report said.At the national level, labour market recovery is strongest in high-income countries, while lower-middle-income economies are faring worst.

To an extent, the downgrade in the 2022 forecast reflects the impact that recent variants of COVID-19, such as Delta and Omicron, along with the uncertain future course of the pandemic are having on the labour market and the economy.

The report highlights that the underlying structural deficiencies and inequalities are increasing and prolonging the adverse impact of the pandemic-induced crisis. It also warns about the different impacts of the crisis across groups of workers and countries, which are deepening inequalities within and among countries and weakening the economic, financial and social fabric of almost every nation. “This damage is likely to require years to repair, with potential long-term consequences for labour force participation, household incomes and social and – possibly – political cohesion,” the ILO said.

Guy Ryder, ILO Director-General, said, “There can be no real recovery from this pandemic without a broad-based labour market recovery. And to be sustainable, this recovery must be based on the principles of decent work – including health and safety, equity, social protection and social dialogue."

The ILO report said that the disproportionate impact of the crisis on women’s employment could last in the coming years. Additionally, the closing of education and training institutions “will have cascading long-term implications” for young people, especially those without internet access.