In the first quarter of 2020, a previously unknown virus that later came to be known as COVID-19 was declared a global pandemic. This move by the World Health Organization (WHO) set off a series of events that culminated in an almost complete shutdown of all non-essential industries in most parts of the globe. In particular, governments put in place regulations and rules that restrict people’s movements, interactions with one another, and the global supply chain. These measures had profound negative effects on the industries, the purchasing power of their customers, and the ability of thousands of companies ability to remain going concerns. Consequently, many companies across industries furloughed workers, shut their doors completely, or downsized their workforce to cope with the unusual circumstances they found themselves in. Therefore, COVID-19 led to a global rise in the rate of unemployment as companies across various industries and countries went bankrupt or laid off staff to stay afloat.
A study on the effects of COVID-19 on the employment levels in the European economies found that the pandemic led to rapid unemployment in the economies of Germany, Italy, Spain, and the UK. In particular, the study asserted that COVID-19 affected all the sectors of European economies including the labor market (Su et al., 2021). Further, COVID-19 led to a massive underemployment problem and thus the studied European economies were dealing with massive underemployment and unemployment directly attributable to the pandemic. Both underemployment and unemployment led to a spike in the levels of poverty and a decrease in purchasing power of a significant percentage of the European population. The most negative group of people according to the study was the low-skilled workers who were already on the verge of poverty before the pandemic struck (Su et al., 2021). The study also notes a negative effect on the German economy would have a similar effect on other European economies due to its size and interconnectedness. Thus, COVID-19 led to unemployment and underemployment in European economies.
The unemployment situation in the United States worsened in the aftermath of the declaration of COVID-19 as a global pandemic. According to one estimate, approximately 50 million people who were previously employed lost their jobs because of the pandemic (Rigby, 2021). This massive loss of jobs led to an increase in unemployment levels to 15% in April 2020 (Rigby, 2021). This was a catastrophic rise in unemployment levels that under any other conditions would guarantee social unrest. As in the European economies, low and lower-middle-income households were disproportionately affected by unemployment during the pandemic. In particular, according to one study, approximately half of individuals with incomes less than $75,000 annually became newly unemployed in the first months of the pandemic (Rigby, 2021). In addition, African Americans and Hispanics were the largest groups of newly unemployed individuals because of the pandemic. Coincidentally, these groups also had long-standing health disparities compared to other racial and ethnic groups in the US. Thus, besides unemployment, the pandemic brought to light the health disparities among the various racial groups.
In Asian economies, the pandemic triggered significant disruptions in the labor market that disproportionately affected the youth population in the region. In particular, nearly 220 million youths aged 15 years to 24 years in Asia were employed in short-tenure jobs that were particularly vulnerable to the pandemic (Morris & Weidenkaff, 2021). Coupled with their inherent lack of experience, young people in the region were less likely to secure a job during the pandemic when compared to older and more experienced individuals. Further, structural issues in most Asian countries’ economies meant that most youths in these regions were underemployed and underutilized even before the pandemic. Thus, with the onset of the pandemic, the conditions of hundreds of millions of young people in the job market worsened. Those employed in the wholesale, retail trade, and repair, rental and business services, manufacturing, food services, and accommodation were particularly negatively affected as a significant portion of companies in these industries closed down or went bankrupt (Morris & Weidenkaff, 2021). Thus the immediate results of the pandemic in terms of unemployment severy impacted the youthful populations of the Asian economies who were already underemployed in highly vulnerable industries.
COVID-19 worsened an already worse unemployment number in Sub-Saharan Africa (SSA). Before the pandemic, SSA was already trailing other economies in terms of the number and percentage of unemployed people. Thus, the outbreak of the pandemic distorted the vulnerable development and growth trajectory of most African economies leading to a massive job loss. Additionally, the lack of economic resilience and sound economic policies undermined some of the efforts that many African countries attempted in order to rescue their economies leading to a longer recovery period compared with Western and Asian economies. As a result of pervasive unemployment in SSA, pandemic-induced emergencies and social crises have occurred in some African countries. For example, unemployment in Africa’s most populace country (Nigeria) with more than 200 million people peaked at more than 27 percent during the pandemic (Fagbemi et al., 2022). Therefore, the pandemic led to an increase in unemployment levels in most SSA economies, a problem that was exacerbated by structural and functional economic weaknesses.
Besides the global economies, COVID-19 also hit industries that directly led to reduced employment worldwide. Specifically, the global aviation industry witnessed the worst year in its history in 2020. With a ban on cross-country transportation and restrictions on international travel, most airline companies grounded their fleet causing massive layoffs and losses. The impact on the global airline industry was significant such that most airlines had to receive bailout money to remain solvent. In some instances such as in the US, the major airlines received several bailouts to avert a cash crunch that would have resulted in bankruptcy. According to some estimates, the global airline industry and related industries laid off more than 25 million people during the pandemic (Maneenop & Kotcharin, 2020). Finally, despite a steady recovery in most sectors of the global economy as vaccination rates increase, the global aviation industry is still reeling from the native effects of the pandemic.
The COVID-19 pandemic had a profound negative impact on the global employment levels. In the immediate aftermath of the declaration of the pandemic by the WHO, many countries restricted movement which led to the closure of most non-essential businesses. Governments’ actions to stem the spread of the pandemic led to an avalanche in the number of unemployed and underemployed people in Europe, the United States, Asia, and Sub-Saharan Africa. The rising unemployment and underemployment during the pandemic had particularly negative consequences for some groups such as the youths, working class, lower-middle class, and racial minorities such as African Americans and Hispanics in the US. Besides the global economies, global industries such as the aviation industry were severely affected by the pandemic leading to massive job losses and an increase in unemployment rates.
References
Fagbemi, F., Osinubi, T. T., & Olatunde, O. S. (2022). Covid-19 and unemployment: Showcasing Sub-Saharan African experience. Jindal Journal of Business Research, 11(1), 24–33.
Maneenop, S., & Kotcharin, S. (2020). The impacts of COVID-19 on the global airline industry: An Event Study Approach.Journal of Air Transport Management, 89.
Morris, C., & Weidenkaff, F. (2021). Tackling the COVID-19 youth unemployment crisis in Asia and the Pacific. International Labour Organization and Asian Development Bank, 1–42.
Rigby, E. (2021). The covid-19 economy, unemployment insurance, and Population Health.JAMA Network Open, 4(1).
Su, C.-W., Dai, K., Ullah, S., & Andlib, Z. (2021). Covid-19 pandemic and Unemployment Dynamics in European economies. Economic Research-Ekonomska Istraživanja, 1–13.