Introduction
The coronavirus (COVID-19) pandemic has caused major disruptions to global economies. It can be classified as one of the most overwhelming crises experienced for decades considering that the whole world was unprepared. Economic losses from businesses shut down have been one of the greatest focus of current studies and commentaries regarding COVID-19. However, it is important to acknowledge that the implications of the pandemic go beyond this point. One of the main results of the COVID-19 was a requirement for social distancing practices to prevent its spread. Such a regulation meant that all places where people gather were closed, and this included the workplaces. One effect of shutting down businesses was the loss of jobs. In some cases, adjustments were made to allow for aspects such as remote working wherever possible. In all other cases, employees had to stay at home without a source of income. This serves to show that one of the aspects most affected by COVID-19 was labor economics.
The job crisis caused by the coronavirus pandemic has an unprecedented magnitude. A few attempts have been made by scholars and international organizations to examine the extent of these effects. Among the latest research efforts by the International Labor Organization (ILO) has been examined by Lee, Schmidt-Klau, and Verick (2020) who agree with ILO on the notion that the annual averages fail to reflect the realities of the situation because it changes rapidly. A case scenario presented to back this argument is that when people lost their jobs, some opted for other alternatives such as working shorter hours and are now counted as employed. Other have kept their jobs but are not working and this group is regarded as employed as well. This situation means that employment statistics only offer a vague representation of the real problem. Therefore, an academic and scientific examination of the real effect may help to resolve this issue and offer a better understanding of the real implications of COVID-19 on the labor market.
From a theoretical perspective, it can be argued that disruptions in employment cause far-reaching consequences for labor economics. The productivity of labor is greatly damaged for multiple reasons, including the fact that some employers retain non-working personnel who are only a cost to the firms. This concept can be described as hoarding or labor where firms keep workers because they fear high costs of firing, then re-hiring them when the crisis is over. These lessons have been learned from previous crises, including the Great Recession as discussed by Oulton and Sebastiá-Barriel (2016). Similar trends can be observed with the COVID-19 where companies send workers home to await the eradication of the social distancing and other restrictions so that they can resume work. In these circumstances, unpaid leaves and job losses affect the demand and supply sides of labor and these effects can be felt even after the situation eases.
For this research, the focus will be on the effects of COVID-19 on the labor economy. The major question addressed in the study is how the pandemic has affected unemployment, demand and supply of labor, and effects of outcomes such as reduced wages and lockdowns. The available research is limited and, therefore, this research will add to the theory development regarding the true extent to which the COVID-19 as affected global labor economies. As a summary, it can be argued that COVID-19 has led to massive job losses whose consequences include loss of livelihood. With businesses struggling to stay afloat, reduced compensation further affects such aspects as increased debts and inability to sustain families and dependants.
The research method will be a literature review where secondary sources of data will be explored. As a research methodology, a literature review focuses on what has already been done on a subject. Additionally, it seeks to synthesize the available information to help reach general conclusions. Regarding the structure of the dissertation, a literature review will follow this introduction chapter where the main concern will be exploring the current scholarly work on the subject. The third chapter discussed the research methods deployed to achieve the objectives of the stud, for example, data collection and analysis. The fourth chapters presents and elaborates on the findings of the explorartin. Lastly, a conclusion and recommendation section sumps up the study and recommends what should be done to combat the disruptions in the labor economy.
Literature Review
The literature regarding the effects of COVID-19 on the labor economy is limited. However, several research attempts, some in the form of working papers, have been made by scholars and experts. A case study of the hospitality industry has been presented by Huang et al. (2020) who found that as of May 2020, an estimated 5.5 million people became unemployed in this sector. The areas that were most affected include accommodation, food, arts, recreation, and entertainment. The data used was obtained from the United States Bureau of Labor Statistics (BLS) which had conducted a survey between April and May. The survey’s results estimated the unemployment in hospitality at 36% -39% (Huang et al., 2020). The hypotheses that were drawn from their observation included that COVID-19 and the government policies of business closure directly caused unemployment in the sector. Their hypotheses are valid considering closing businesses, which are a major source of employment, has the immediate effect of making people jobless. These scholars have also made comparisons between COVID-19 and previous epidemics and the outcomes have shown some similarities. Therefore, it can be argued that these findings are justifiable considering the empirical evidence used.
The entire world has been affected in almost similar ways by the pandemic. A global perspective of these effects has been examined by Lee, Schmidt-Klau, and Verick (2020) who use statistics from the ILO. The main argument presented by these scholars is in support of ILO’s finding that the scale of the labor market disruption has been unprecedented and that the annual averages do not reflect the reality.
ILO’s assessment finds several anomalies in the estimation of the resulting unemployment statistics, which can be represented in the form of labor productivity. For example, some employees have retained their jobs while staying at home without operating because their employers are hoarding workers to re-utilize them when the crisis is over. The issues that arise is that these workers are not considered as unemployed, meaning that the labor statistics fail to present the true extent of unemployment. However, it can still be estimated that the levels of poverty have risen drastically, especially among informal workers, where the income losses are estimated to be over 80% (Lee, Schmidt-Klau & Verick, 2020). Poverty levels in this population will rise between 26% and 59%, further showing the true effects of the pandemic (Lee, Schmidt-Klau, and Verick, 2020). Therefore, these studies based on the initial assessment has provided a general overview of what can be expected if the crisis persists.
Among the initial measures implemented by governments involve implementing restrictions on movements and closure of businesses. The economic effects of these strategies include the inability of businesses to sell goods and services to their consumers. It means, therefore, that the demand for labor also declined as explained in a study by Forsyth et al. (2020). These researchers use data obtained from vacancy postings and unemployment insurance. The credibility of these sources of information can be verified by the fact that sudden drops in the number of job vacancy postings can illustrate that businesses are no longer hiring. Additionally, a sharp increase in the unemployment insurance claims can indicate that more people have lost their jobs. If these metrics have coincided with the emergence of the pandemic, then it can be posited that COVID-19 has had a direct influence on the demand for labor. Forsyth et al. (2020) find that there have been mixed results. For example, some occupations have recorded smaller declines in demand while others show a sudden fall.
Those firms offering goods and services that are considered essential retained most of their employees and, therefore, took the smallest hit. However, other industries such as hospitality and leisure were recorded the biggest collapses (Forsyth et al., 2020). These findings support the observations made by Huang et al. (2020) who also illustrated that the hospitality and leisure industry cause massive levels of unemployment. These studies suggest that government policies played a major role in how labor economics panned out during the pandemic. This is because the states determined which services and products are essential and where businesses could not be allowed to shut down completely. Travel bans and lockdowns restrict movements which are key for industries such as aviation, transportation, and hospitality. The basic idea, however, is that the pandemic and the resulting government measures resulted in a decline in the demand for labor.
Some studies have attempted to link the labor dynamics and government responses to the pandemic. Such an attempt has been made by Shuai, Chmura, and Stinchcomb (2020) who have also used the data from job postings. Their estimates show that the pandemic has caused a 30% decline in the job adverts, which indicate a reduction in the demand for labor. Additionally, they find that the government’s responses, such as stay-at-home policies, had the effect of suppressing the demand. Lastly, Shuai, Chmura, and Stinchcomb (2020) note that the pandemic may have caused an increase in the demand for labor in the healthcare industry. Such an argument supports the idea that the services and products deemed essential are least affected by the pandemic as explained in the research by Forsyth et al. (2020). The rationale for the increase in labor demand in healthcare is simply due to the fact that more patients require more personnel. For hospitals to expand their capacities, one of the responses is to increase the number of key employees, including nurses and physicians. The role of the government has been to determine which industries continue operating and those that need to halt.
Several scholars have presented working papers, which express scientific explorations of the links between COVID-19 pandemic and the labor economy. A perfect example is the study by Mohan, Hagerty, and Norton (2020), which explains that among the first measures by businesses to check whether the pandemic included new compensation plans for both employees and upper management. Some firms considered furloughing, firing, and reducing the wages for the employees. The outcomes for such moves had severe implications on consumer behavior. Such an observation by Mohan, Hagerty, and Norton (2020) aligns with the primary objective of their study. Arguments for the pay cuts have been critically reviewed by the primary data collected. Additionally, the evidence and distribution of the pay cuts are examined. The main rationale for the decision by corporations to slash employee wages is to help offset the losses that would be suffered for operating below capacity. It can be seen as an alternative to firing workers, but its effects are still detrimental to the economic wellbeing of the workforces.
The pandemic has been expected to collapse the labor market, especially due to the business closures and government policies. A working paper by Bartik et al. (2020) has measured the labor market after the emergence of COVID-19 in the United States and made several observations. First, unstable businesses were more likely to close completely. Second, smaller entities suffered the largest job losses, especially those that were shut entirely. However, many have reopened apart from those that were unhealthy before COVID-19. Third, many workers are expected to be recalled when government restrictions ease and re-hiring commences. Lastly, Bartik et al. (2020) found that there was no evidence that high unemployment insurance claims rates contributed to job losses or slowed the re-hiring process. Therefore, labor economics underwent what can be described as a multiplier effect where one immediate outcome leads to another. In this case, it can be argued that the main point by Bartik et al. (2020) is that unstable businesses closed totally and failed to reopen. On the other hand, a few previously healthy firms have already resumed and rehired employees.
COVID-19 can be expected to have both short term and long-term effects on the economy. However, it is easier to explore the short-term impacts of COVD-19 because they have already started to manifest themselves. One such attempt to outline the short-run effects was made by Cowan (2020) whose focus was the U.S. worker transitions. Cowan (2020) finds that the vulnerable groups in the country have been most affected by the pandemic. The racial minorities who were employed in February 2020, including Blacks, Asians, and other races, were less likely to be at work in April as compared to Whites. Cowan (2020) also finds that Blacks were most affected minority race. Employees under 30 years and those above 60 were also affected similarly, but the impacts differed across industries. In other words, the research found that that the pandemic disproportionately affected the vulnerable groups in the country as these populations were more likely to lose their jobs. Additionally, the effects were mostly felt during transitions as it became harder to switch from one post to another.
Another key aspect that should be examined deeply is the state of immigrant labor across those countries which use them. Scholars such as Borjas (2020) have explored this phenomenon and found the pandemic to have devastating effects. In many nations, including the United States, the immigrant workers make up an estimated 17.6% (Borjas, 2020). Historically, this group has had varying employment rates as compared to the American-born workers and higher than that of the American Natives. In 2019, Borjas (2020) found that the employment rate for the immigrant had reached 88.7%. This was recorded at the peak of employment in the country. At the onset of the pandemic, a dramatic loss of jobs was the immediate result with the most affected group being the undocumented immigrants. It is estimated that a third of the undocumented immigrants lost their jobs between March and May (Borjas, 2020). With measures such as travel restrictions, it can only be assumed that the immigrants are likely to join the list of those people whose levels of poverty rose drastically.
While these working papers may not have been peer-reviewed, the scientific evidence is overwhelming and generally credible. The efforts of the researchers can be lauded as they will become among the first publications to offer a peek into the reality of the true implications of COVID-19 on the labor economy. For example, Borjas (2020) explores what happens to immigrant labor, a population that can be considered vulnerable alongside those examined by Cowan (2020). The empirical evidence from these papers is acceptable and it has helped paint a clear picture of the links between the labor economy and the pandemic.
Different countries across the world have been affected differently depending on how well each responded to the pandemic. Therefore, it is essential to review a few case studies to help identify the differences and comparisons between states. The working papers by Borjas (2020) and Cowan (2020) can also be qualified as case studies considering that they have examined by the United States. An exploration of India’s situation has been presented by Khanna (2020), who illustrates that millions of immigrants were left unemployed in the country as a result of both the lockdowns and fears of a recession. Migrant workers have been forced to return to their homes and settle in villages as they await improvements in the restrictions to allow them to go and resume their work. This research, therefore, shows that similar effects on migrant workers have been felt globally.
Another country where immigrant labor is extensively used is Saudi Arabia and the effects of the pandemic show similarities with those of India and the United States. A case study by Al-Youbi et al., 2020) expresses that Saudi Arabia had already undertaken major transformations of its workforce to allow more Saudi citizens to get more involved in employment. Additionally, the government has been supporting small and medium enterprises, which are perceived as a key part of this major change. The COVID-19 pandemic, however, has massively upset the socioeconomic and demographic balance in the country, which has resulted in most of the unskilled immigrant workers leaving the country. The cause of this scenario was the massive loss of jobs or skill mismatch. Additionally, the labor market in Saudi Arabia is becoming more polarized where career plans now focus more on job security as opposed to future growth or better wages. These unique situations in the country illustrate that the effects of the pandemic are felt differently from other states, but the outcomes for immigrant labor remain the same.
The third world countries have also suffered greatly from the pandemic. A case study that can represent the developing states has been presented by Sirah and Atilaw (2020). These scholars express that Africa is the continent with the largest young population, which is estimated at 10-12 million youths entering the labor market annually. Joblessness has already been a major issue, but the pandemic has caused further deteriorations by reducing the productive capacity of the country. Unemployment rates, therefore, are expected to increase as COVID-19 persists. Therefore, it can be argued that all countries where the responses were not effective suffered most in terms of job losses.
Research Questions and Objectives
The primary objective of this research is to determine how COVID-19 has affected the labor economy. In essence, the labor economy responds to the changes in business and policy environments where actions taken by businesses and measures implemented by the governments determine what happens in the labor market. Specific objectives, therefore, include examining possible changes in the labor market as robots replace humans. The demand and supply of labor as a result of COVID-19 is explored, as well as the balance between unemployment and reduction of workers and the risks and benefits of lockdowns. The research questions for the study will also be derived from these objectives as highlighted below:
- Will Covid-19 be the pandemic that changes human labor into robots?
- How could supply and demand affect labor economy?
- Will cutting wages of workers help the economy to save money?
- How to keep a balance between unemployment and reduction in workers?
- Are lockdowns benefit more than the risks?
Research Methods
With the current situation with the COVID-19, it is increasingly difficult to conduct primary research. This research will be qualitative research which uses secondary data to address the questions outlined above. As a qualitative study, textual data from secondary sources will be analyzed. This type of inquiry has been defined as a form of social action which emphasizes how people interpret and make sense of their day-to-day experiences (Mohajan, 2018). The focus is usually on understanding the social reality of the people involved. In this case, however, this qualitative research explores the reality of the COVID-19 pandemic. As opposed to examining the lived experiences, the evidence will be derived from past studies and observations which comprise the major sources of data.
The type of data collected will be determined by the research questions and how the subject has been addressed in the past. As can be observed in the literature review chapter, previous studies have been experimental and statistical meaning these types of information will also feature in this study. It is important to emphasize, however, that no statistical analysis will be conducted on any numerical data collected since only outcomes of past studies are used.
The data collection method of choice will be extracting data from searches in online databases. Google Scholar is particularly important because search criteria can be selected based on the topic and date. In this case, all materials linking COVID-19 and labor market will be searched using the relevant keywords. The inclusion criteria include that all sources must explain one or more themes being studied. Keywords for each theme can be developed and searched independently. There is no limit to the number of sources that can be used for each theme as the intention is to explore each of them as deeply as possible.
Data analysis will be conducted using thematic analysis as the method of choice. According to Nowell et al. (2017), the thematic analysis may have been poorly branded and yet it has been extensively deployed in qualitative research. Additionally, Nowell et al. (2017) hints that thematic analysis has not received the same level of appreciation as other approaches, including ethnography, grounded theory, and phenomenology. Despite such sentiments, the rationale for the adoption of thematic analysis is that it is instrumental in undertaking steps such as identifying, organizing, analyzing, describing, and reporting key concepts featuring in a dataset. In this case, the thematic analysis is used to briefly describe the pre-determined themes as expressed in the research questions. Each of the study questions is viewed as an independent theme. Therefore, information regarding them will be searched and used to illustrate how COVID-19 pandemic affects various aspects of labor economy.
The deployment thematic analysis is based on its appropriateness in qualitative research. Its advantages include theoretical freedom as it offers a highly flexible approach can be modified to meet the specific needs of a study. Additionally, thematic analysis can be used to provide a detailed, rich, and yet complex data accounts. Thematic analysis method requires little theoretical and technical knowledge on the part of the research as compared to other qualitative methods. As a result, this approach tends to offer scholars a better form of data analysis. The perspectives of research participants can be explored and, in this case, those of the researchers addressing the previous subject. The thematic analysis process will not include exploring the credibility and validity of the data, especially where working papers or previous studies are used as sources of data. However, the findings from multiple sources of data will be used to express a singular view of each theme.
The use of secondary data can have a few ethical implications which will have to be observed. Such issues have been explained by Jol and Stommel (2016) whose main focus in informed consent. In primary studies, informed consent is sought from the research participants. However, the secondary data is often pre-recorded by other parties and consent is also needed to use their observations for research purpose. Permission to access databases will be sought where primary data are needed. In this study, however, descriptive data will be a major consideration and it can easily be accessed from published materials. The concept of informed consent may not apply in such a scenario. However, the ethical use of such materials will be observed, including accrediting the authors and or publishers of such information.
Findings
The findings section will be subdivided into five themes each examining one of the five research questions posed in this research. The use of thematic analysis has been described in the methodology section above. The primary focus of this approach is to offer a brief description of the information obtained from the literature search and to elaborate on how it addresses the study questions. The five themes are how COVID-19 changes human labor into robots, supply and demand of labor, effects of cutting wages, maintaining a balance between unemployment and reduction, and benefits and risks of lockdowns.
Changing Human Labor into Robots
This theme focuses on the responses by businesses where the main argument is that when people are unable to work, then the best alternative is the use of robots. This is indeed one of the most common themes in research related to the implications of COVID-19 on human labor. In many studies, the role of the robots is seen as increasing and evolving across industries as a response to the disruptions caused by the pandemic. In other cases such as healthcare, the use of robots is intended to aid in the digitization in the management of the COVID-19 as expressed by Khan, Siddique, and Lee (2020). A summary of the studies on this theme is presented in Table 1.
Table 1: A summary of the effects of COVID-19 on the adoption of robots (developed using MS Word).
As expressed in these studies, many industries are turning to robots in response to the unavailability of human labor caused by the pandemic. In many cases, the robots are adopted as a response to the labor shortage or as a tool for managing the pandemic. Regardless of the context, it can be surmised with many businesses increasing the adoption of robots, human labor will be replaced at a higher rate than was the case before the pandemic.
Supply and Demand in the Labor Economy
The demand and supply in the labor industry have drastically changed after the emergence of the pandemic. The materials examined in the literature review have explained these dynamics and can be used to answer the research question regarding this theme. The demand side entails the businesses seeking to employ workers while the supply side comprises those willing and actively searching for jobs. Therefore, the act of firms firing employees and fewer of them advertising for positions is an indicator of diminishing demand. On the other hand, the high unemployment rate shows a growing supply of labor which exceeds the demand. Therefore, the studies by Oulton and Sebastiá-Barriel (2016) which show companies sending workers home illustrate the movements in demand and supply of labor. The general conclusion from multiple studies examined is that the pandemic has dramatically reduced the demand for work and saturated the market with excessive supply (Forsyth et al., 2020; Huang et al., 2020; Bartik et al., 2020). The flows of the demand and supply of labor follow the responses by both the government and the industries.
Regarding the changes in demand and supply, it is also prudent to examine other factors that play a key role. In the previous theme, the possibility and initiatives of the businesses in replacing human labor have been explored. The main observation made was that the robots were used both as a tool to manage the pandemic and as an alternative to human labor (Chen, Marvin, and While, 2020; Zheng, Chen, and Lew, 2020). This also affects the demand and supply where more robots mean fewer humans. Such a scenario may reflect itself better during the post-COVID-19 period where some of the people who lost their jobs may not recover them as their positions are taken up by robots. In such a case, the demand and supply curves will shift until a new equilibrium is achieved.
Cutting Wages
There have been many responses by businesses to the COVID-19 pandemic. Several studies, including one by Mohan, Hagerty, and Norton (2020), explain that some of the initial measures focused on cutting wages for both the employees and the senior management. Such was an effort to allow firms to retain workers with the hope of restoring normal compensation plans in the future after the pandemic ends. However, the main question that is being asked in this theme is whether reduced wages will save the economy. In a working paper by Meyer, Prescott, and Sheng (2020), it has been expressed that the shocks have caused businesses to make adjustments to stay afloat. The adverse effects of the coronavirus have increased operational costs, which would result in a spike in commodity prices. Trimming wages and salaries is seen as an effective way of reducing these costs and sustaining both the businesses and prices.
The question of whether cutting wages will save the economy has expressly been addressed in current research efforts. However, the view of Sapkal (2020) regarding saving jobs and averting layoffs can help explain the relationship between reduced wages and economic future. The economic derivation would be the immediate result of job losses, especially among the low-income earners. However, paying workers who are not working at all or full capacity would also be unsustainable for businesses due to the losses which may arise. Therefore, a compromise would be to reduce the wages to allow businesses to keep workers and employees to have a source of income for sustenance. With this type of relationship, it can be argued that the economy can be saved by ensuring that a complete collapse is averted. Additionally, the government may be forced to increase its expenditure to fill the gaps caused by layoffs in efforts such as relief food. Heavy expenses at a time when the economy is completely shut could be illogical and dangerous for the economy.
Balance between Unemployment and Reduction of Workers
The question of how to achieve a balance between unemployment and reduction of employees has not been addressed in literature or other sources of information explored in this research. It will remain, therefore, a question for a future exploration where evidence of efforts, expert commentary, or even primary studies can be used to find the relevant answer. It can be argued, however, that this theme can be examined from a policy perspective where the government takes control of the economy and requires certain actions by employers. Such a scenario can be explained by the study by Sapkal (2020) which explains how the government of India has tried to make sure employees are not fired during the pandemic. The government acted within its power to protect the economy. Therefore, state initiatives are perceived as the best starting point in exploring this theme.
There have been a few attempts to explore labor policies resulting from the pandemic. One such a study that can be used to support the argument that a balance between unemployment and reduction of workers has been undertaken by Dias et al. (2020). The argument by these researchers is that one of the initial government responses include taking measures to prevent employment ties from being destroyed in the vulnerable sectors by encouraging acts of labor hoarding. This concept has been described above where it was expressed that the businesses retained workers with the hope of employing them when the crisis ends. Further exploration of this theme could also focus on the use of labor hoarding as a tool for pursuing the desired balance.
Effects of Lockdowns
The lockdown and its effects are one of the themes most studied and discussed. The rationale is that the immediate implication of such initiatives is shutting down an economy and preventing people from making a living. The issues become more controversial when exploring the rationale for their implementation considering the governments have had to choose between stopping the spread of the pandemic and denying people access to a living. A simple exploration by Karnon (2020) reveals that immediate lockdown policies result in more people suffering dire economic effects but for shorter periods. A delayed decision may cause more spread and the economic effects may be prolonged. The point taken from this study is the adverse economic effects of job losses. Evidence from the early adopted lockdowns has been examined by Asahi et al. (2021) who find that lockdowns caused between 10% and 15% decline in local economic activity. This theme seeks to answer the question of whether the lockdown has more benefits or risks, a question that has not been directly answered in the literature. However, it can be argued that it is a question of the costs of the spread versus the economic losses caused by the lockdown.
Even though the theme has not been directly addressed, inferences can still be made from the available data. The study by Karnon (2020) best answers the question of risks and benefits by presenting a decision analysis of the problem, the findings indicate that immediate lockdowns offer more benefits than delayed ones since the main concern is the length of time the effects will be felt. Other studies indicate dangers in areas such as healthcare, psychology, and environment (Atalan, 2020; Gopalan and Misra, 2020). However, without a proper analysis of the damage prevented by the lockdowns, it is hard to explain whether these risks are greater than the benefits. It can be argued that human wellbeing is a priority and the number of deaths recorded shows the extent to which the pandemic can cause havoc. The places where lockdowns have worked successfully can be used as evidence that the risks averted are greater than those suffered.
Conclusions and Recommendations
The COVID-19 can still be regarded as a novel pandemic whose devastation has overwhelmed many nations and economies. The pandemic has sparked a stream of research with scholars striving to show the real effects it has on various aspects of human life. In this case, the focus has been on the labor economy where shifts and movements in both demand and supply have been observed. The findings support the statement that COVID-19 has caused massive job losses, especially among the vulnerable populations. In countries such as the United States, the minority races and immigrants have been the most affected. Lost sources of income translate into growing levels of poverty. In several of the case studies examined for specific countries, immigrant labor has been devastatingly affected because most individuals were forced to return to their home countries and the rest undergoing severe economic deprivations.
The five themes explored in this research have made significant contributions towards understanding the full extent of the devastation caused by the pandemic. The theme of balancing between unemployment and reduction of workers, however, has received inadequate attention meaning only recommendations for the further examination can be presented. In all other themes, there have been efforts by scholars to present empirical evidence of the dynamics of the labor economy as a result of COVID-19. The general conclusion can be that COVID-19 has disrupted the labor economy and changed the demand and supply curves.
With the findings indicating the dangers of the pandemic, the first recommendation is that critical policies have to be developed to prevent further devastation. The labor economy has appeared to be very fragile due to the dual impact of the responses by businesses and policies from the government. A multiplier effect is seen when the state implements certain measures that affect the way businesses operate. For example, lockdowns mean that businesses have to close down because workers and consumers are confined within their homes. For the firms which continue operating, the nature of the jobs has changed and new personnel may be needed. A good illustration is a store which previously allowed customers to visit, but due to the lockdown, it has to make deliveries. In this case, the personnel needed to include those involved in packaging and delivery drivers as opposed to customer service within the stores.
Additionally, the government should mitigate against the massive job losses. A case study of India has shown that the state can act to force employers to retain their workers to avoid a complete economic collapse. During the pandemic, it has also been expressed that many firms are increasingly adopting robots, AI, and automaton which could further devastate the labor economy. These are more effective than human labor and they could completely replace the fired employees. The losses of incomes would force the governments to provide alternatives or to develop schemes and measures to support the unemployed population. The extent to which the effects of mechanization can be felt is a subject that might need further exploration. However, automation in the manufacturing industries and the corresponding loss of jobs can serve as evidence that robots can cause massive hikes in the unemployment rates.
Limitations and Future Research
This research has utilized secondary data due to its availability and the fact that COVID-19 restrictions make it hard to conduct primary research. The amount of time it takes to conduct and publish primary research can be long and, therefore, it is hard to ascertain that the secondary data used can offer the most recent insight into the research problem. As has been illustrated in the literature review, some scholars have presented working papers which can be used as sources of data. Their credibility cannot be ensured until the final publication where peer reviews have been done. However, the shortage of materials has necessitated their use to offer a more comprehensive review of the situation. As a novel area of exploration, the real effects of COVID-19 pandemic on the labor market will remain relatively unclear meaning primary studies offer better approaches to understanding it.
With these research limitations, empirical evidence would be needed for future research. It can be argued that the best evidence is the lived experiences rather than the estimations and projections by experts. The pandemic has persisted for several months and the effects can now manifest themselves. Additionally, there are cases where the restrictions are being eased and some businesses are resuming. In such a case, new movements in the demand and supply of labor can be expected and should be investigated. The main concern would be whether the firms can recall entire workforces and the changes that will occur during the post-COVID-19 period. Therefore, several interesting research topics are emerging which involve the labor market. The future research should also consider better exploration methods which can offer a clearer view. However, this is not intended to nullify the efforts in this research, but an observation that the secondary data available may not offer the most recent dynamics. The changes taking place are rapid and many changes can happen within a matter of days.
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