Webinars in Economics

IMPACT OF COVID-19 ON
THE WORLD OF WORK

Speaker
Prof. Dr. Aliya H. Khan
Member, Economic Advisory Council, Pakistan
Professor of Economics, Quaid-i-Azam University, Islamabad

Organizer
Department of Economics
Fatima Jinnah Women University
The Mall, Rawalpindi

Date: 10th July 2020

IMPACT OF COVID-19
ON THE WORLD OF
WORK
Prof. Dr. Aliya Hashmi Khan
Quaid-i-Azam University
Islamabad

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 COVID-19 Quotes
 “COVID-19 will be remembered as the
virus that stopped the world. And while
we all agree that managing the health
crisis is the overwhelming priority, the
social and economic consequences are,
and will be, dramatic in an already
troubled world.”
 Sharan Burrow, General-Secretary,
International Trade Union Confederation.
Brussels, Belgium

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 COVID-19 Quotes
 “The coronavirus is a shock to the economy the likes of which none
of us has ever seen. A hurricane hitting every place in the United
States, Europe, and much of the rest of the world simultaneously.
And hitting every day for weeks, months, or perhaps even a year. It
is partly a supply shock as workers can no longer work and supply
chains get severed. It is also partly a demand shock as people will
cut back their demand throughout the economy given the extreme
nervousness about their economic situation. The public health
measures to flatten the curve, delaying and spreading out the
extent of the virus, will necessarily and appropriately impose large
economic costs. The job of economic policy is, to the greatest
extent possible, to protect people from those costs now and help
ensure the economy is in a position to rebound quickly when the
health threat is contained. Doing this will require a multifaceted and
ambitious policy response.”

“Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes”.
Edited by Richard Baldwin and Beatrice Weder di Mauro. March 2020.
A CEPR Press VoxEU.org eBook.
4
 Looking back: Labour market
disruptions in the first half of 2020
 Workplace closures
 The vast majority, namely, 93 per cent, of the world’s
workers continue to reside in countries with some
sort of workplace closure measure in place.
 Working-hour losses: Much larger than
previously estimated
 The latest ILO estimates show that working hour
losses have worsened during the first half of 2020,
reflecting the deteriorating situation in recent weeks,
especially in developing countries. Working-hour
losses for the second quarter of 2020 relative to the
last quarter of 2019 are estimated to reach 14.0 per
cent worldwide (equivalent to 400 million full-time
jobs).
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 Looking back: Labour market
disruptions in the first half of 2020
 Working-hour losses: Much larger than
previously estimated (contd.)
 The factors driving the decline in working hours vary
considerably across the countries for which relevant
data are available.
 In some countries, shorter working hours and “being
employed but not working” (e.g. where workers are
put on temporary leave) contributed significantly to
the decline, while in others, the main driving factor
was people being pushed into unemployment and
inactivity.
 These variations suggest that a narrow focus on
unemployment does not allow a proper assessment of
the pandemic’s impact on the labour market.
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 Looking back: Labour market
disruptions in the first half of 2020
 To identify the key mechanisms behind the
impact of the crisis, working-hour losses may
be decomposed into four components:
 Shorter hours: a drop in average weekly hours
worked compared to the pre-crisis situation;
 Being employed but not working: workers remain
attached to their existing jobs but do not engage in
any work at all. They are employed but not at work
or temporarily absent from work (e.g. furloughed
workers and workers on sick leave);
 Unemployment: being available for and seeking
employment;
 Inactivity: withdrawal from the labour force.
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 Looking back: Labour market
disruptions in the first half of 2020
 A disproportionate impact on women workers
 Since the COVID-19 crisis is disproportionately affecting
women workers in many ways, there is a risk of losing
some of the gains made in recent decades and
exacerbating gender inequalities in the labour market.
 Pakistan’s ranking on the Global Gender Gap Index
2020 is 151/153 countries with a score of 0.564. The
Economic Participation and Opportunity sub-index =
0.327.
 Women account for a large proportion of workers in
front-line occupations, especially in the health and
social care sectors. Moreover, the increased burden of
unpaid care brought by the crisis affects women more
than men.

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 Looking back: Labour market
disruptions in the first half of 2020
 Against the backdrop of gender inequalities in
the labour market, the crisis is
disproportionately affecting women workers in
four main ways.
 First, a large proportion of women work in sectors
severely affected by the crisis.
 Secondly, women in domestic work have been highly
vulnerable to lock-down and containment measures.
 Thirdly, the overwhelming majority of workers in the
health and social work sector are women.
 Fourthly, during the crisis, the unequal distribution of
increased care demands affects women
disproportionately.
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 Looking ahead: Outlook and policy challenges

 The pandemic has caused turmoil in the

labour market, with massive job and income
losses in the first half of 2020.
 Outlook for the second half of 2020 suggests
that the recovery will be uncertain and
incomplete.
 It is particularly important to mobilize
resources and channel them effectively to
deal with the far-reaching economic and social
consequences of the pandemic and promote a
job-rich recovery while ensuring that workers
are protected in the workplace.
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 Looking ahead: Outlook and policy challenges

 By the end of May 2020, over 90 countries had

introduced or announced fiscal measures of over
US$10 trillion, while a similar number have cut
interest rates following the outbreak.
 The specific policy mix varied across these
countries, but a large part of the fiscal response
took the form of deferrals and waivers of tax,
social security contributions and other payments,
along with the provision of grants, credit
guarantees and wage subsidies to businesses
(including small and medium-sized enterprises) –
in some cases, these were conditional on
employment retention.
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 Looking ahead: Outlook and
policy challenges
 Despite these efforts, the limited coverage of
unemployment benefits and other forms of social
protection schemes have made it more challenging
to effectively contain the damage in emerging and
developing countries, particularly for workers and
households relying on the informal economy.
 According to Labour Force Survey 2017-18, there are
61.7 million employed workers in Pakistan, of whom
23.8 million are agricultural workers and 37.9 million
are non-agricultural workers. Of the country’s 37.9
million non-agricultural workers, 27.3 million (72 per
cent) work in the informal sector, while only 10.6
million (28 per cent) are employed in the formal
sector.
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 Looking ahead: Outlook and
policy challenges
 The 27.3 million informal sector workers are likely
to be those most vulnerable (at-risk) to lose their
jobs, as they are mainly engaged in the sectors
that appear to be adversely impacted due to the
slow down of economic activity.
 The distribution of Pakistan’s 27.3 million
informal sector workers by sector shows that 8.88
million work in the wholesale and retail trade
sector, 6.22 million in the manufacturing sector,
4.43 million in construction, 4.37 million in
community/ social & personal services sectors,
and 3.14 million are engaged in the transport/
storage & communication sector.
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 Looking ahead: Outlook and
policy challenges
 The analysis of informal sector workers reveals that the
majority fall in the categories of “paid employees” (13
million workers, or 48 per cent) and “own account” or
“self-employed” workers (11.2 million, or 41 per cent).
 The bulk of those workers categorized as “paid
employees” earn a monthly wage of less than the
mandated minimum wage of PKR 17,500. This is true
for 9.8 million workers – 75 per cent of the 13 million
paid employees working in the informal sector.
 In addition, both own account workers and casual wage
earners (daily paid employees) face particular
difficulties in securing their income. They also have
little option to work from home, take time off or avoid
commuting to practice social distancing.
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ILO policy framework: Four key pillars in
tackling the COVID-19 crisis
on the basis of international labour
standards
 Pillar 1
 Stimulating the economy and employment
 Active fiscal policy
 Accommodative monetary policy
 Lending and financial support to specific sectors,
including the health sector
 Pillar 2
 Supporting enterprises, jobs and incomes
 Extend social protection to all
 Implement employment retention measures
 Provide financial/tax and other relief for
enterprises
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ILO policy framework: Four key pillars in
tackling the COVID-19 crisis
on the basis of international labour
standards
 Pillar 3
 Protecting workers in the workplace
 Strengthen occupational safety
 and health measures
 Adapt work arrangements (e.g. teleworking)
 Prevent discrimination and exclusion
 Provide health access for all
 Expand access to paid leave

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ILO policy framework: Four key pillars in
tackling the COVID-19 crisis
on the basis of international labour
standards
 Pillar 4
 Relying on social dialogue for solutions
 Strengthen the capacity and resilience of
employers’ and workers’ organizations
 Strengthen the capacity of governments
 Strengthen social dialogue, collective
bargaining and labour relations institutions
and processes

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 Key challenges ahead

 The damage done by the COVID-19 crisis

to labour markets is enormous and
policymakers have to confront major
policy challenges.
 Actual labour market outcomes for the rest
of 2020 and beyond will depend on the
choices they make, as well as on the
pandemic’s future trajectory.
 Moreover, the decisions taken in the near
future are likely to have long-lasting
implications for the world of work.
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 Building a better future of work

 The world will emerge from the COVID-19 pandemic

with higher levels of unemployment, inequality,
poverty and debt.
 This makes it all the more important that,
individually and collectively, governments make the
ambition of “building back better” – as opposed to
building back to where we previously were – a
central tenet of their recovery plans.
 (Analysis based on “ILO Monitor: COVID-19 and the world
of work. Fifth edition . Updated estimates and analysis. 30
June, 2020 and COVID-19 – PAKISTAN SOCIO-ECONOMIC
IMPACT ASSESSMENT & RESPONSE PLAN. Supported by
UNDP & ILO for Planning Commission, Government of
Pakistan, April 2020).

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 How to rebuild and reimagine jobs amid the coronavirus crisis
(McKinsey Global Institute April 2020)

 COVID-19 is the most serious health crisis the

world has experienced in a century—and it
could also be one of the biggest destroyers of
jobs in human history.
 Our worldwide research on emerging
strategies and best practices suggests that
governments and their partners need to take
urgent action in the following two key areas:
 Create a granular view of who needs help to keep
their job—or find new work.
 Build smart, cross-sector solutions to get that help
to them fast.
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How to rebuild and reimagine jobs amid
the coronavirus crisis
(McKinsey Global Institute April 2020)
 Create a granular view of who needs help to
keep their job—or find new work.
 Which industry sectors (manufacturing,
services, agriculture,….) and occupations are
most at risk?
 Which demographic (sorted by age, sex,
marital status,..)/socioeconomic (sorted by
education, income, employment status,...)
groups are most vulnerable?
 How will small and medium sized enterprises
(SMEs) be affected?

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How to rebuild and reimagine jobs amid
the coronavirus crisis
(McKinsey Global Institute April 2020)
 Building smart solutions to help people get back
to work:
 Safeguarding and recreating jobs through targeted
redeployment and reskilling.
 Even before the COVID-19 crisis, structural shifts—for
example, the adoption of automation and the move
toward clean energy—that were reshaping the labor
market and increasing demand for particular skills were
under way.
 Technological advances were expected to bring large-
scale change in demand for particular roles in the
workforce. For example, demand was forecast to
increase for ICT specialists and managers as well as for
“future skills,” such as digital literacy and cognitive,
social, and emotional skills. Demand was expected to
decline for administrative roles. 22
How to rebuild and reimagine jobs amid
the coronavirus crisis
(McKinsey Global Institute April 2020)
 Restarting vulnerable small businesses: The
stalled job engine.
 Governments around the world are already
taking action to support and protect small
enterprises. More can be done—fast—to
build on these initiatives. Ideas for action to
restart and sustain the SME job engine
include the following:
 Build alliances among large and small businesses.
 Protect the most vulnerable segments of SMEs.
Governments need to act fast to ensure that SMEs
—including informal microenterprises and gig-
economy workers—are included in relief and
stimulus packages.
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 COVID-19 Policy Measures -
Pakistan
 Fiscal stimulus package of Rs. 1.2 trillion.
 Ehsaas Emergency Cash Program .
 Soon after the outbreak of Covid-19 pandemic, SBP took a
number of steps to provide economic support to businesses
and households. SBP reduced the financial cost to the private
and public businesses and households by reducing the policy
rate by a cumulative 625 basis points since 17th March 2020
from 13.25% to 7.0%.
 To improve the cash flow of businesses and households, SBP
allowed deferment of principal amount and restructuring of
loans. In addition to these measures, SBP introduced several
refinance schemes to support employment and investment to
fight the economic impact of COVID-19.
 Refinance Scheme to Support Employment and Prevent Layoff
of Workers, commonly known as SBP Rozgar scheme: This
scheme provides concessional loans to businesses for wages
and salaries expenses provided they commit not lay off their24
THANK YOU!

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