Last updated: 18 May 2020
Understanding how the crisis affects the labour market
The present crisis is quite different from previous ones. The impact of the lockdowns adopted to mitigate the pandemic has vastly surpassed that of the initial trade shocks and of the travel restrictions introduced soon after the outbreak (these restrictions had significant but mainly sector specific impacts). Non-essential services and production were directly affected by the lockdowns, which led, among other things, to a reduction in the number of hours worked and to job losses. Unless they receive government assistance, previously viable businesses risk going bankrupt. Countries with greater dependence on the service sector, higher levels of informality and weak safeguards against the termination of employment have experienced much higher initial job losses.
Disruptions in trade and along global supply chains had negative effects on developing economies even before the lockdowns were extended. The fall in commodity prices worldwide will weaken exporting countries’ trade position even further and reduce employment in exporting sectors, which in turn drives fiscal revenue down. Massive capital outflows have led to currency devaluations, making debt servicing and the importing of food and medical supply more onerous, all of which put additional pressure on developing countries’ fiscal balance. This further constrains their ability to respond to the crisis adequately. The effects on enterprises, jobs and incomes will be more severe unless proper measures are taken, all the more so given that workers in these countries already enjoyed less protection and had lower incomes to start with. Moreover, these countries are characterized by labour market volatilities and by the fact that a large majority of their businesses are micro-enterprises operating in the informal economy.
The crisis has had a different impact on enterprises, on workers and on their families, though in each case deepening already existing disparities. Special attention needs to be given to the following groups:
- Women, who hold 70 per cent of jobs in the health and social care sectors and are therefore often on the front line of the response to the crisis (they are also over represented in the informal service sector and in the labour-intensive manufacturing sector);
- Informal economy workers, casual and temporary workers, workers in new forms of employment, including those in the “gig economy”;
- Young workers, whose employment prospects are more sensitive to fluctuations in demand;
- Older workers, who even in normal times face difficulties in finding decent work opportunities and are now burdened with an additional health risk;
- Refugees and migrant workers, especially those engaged as domestic workers and those working in construction, manufacturing and agriculture;
- Micro-entrepreneurs and the self-employed – particularly those operating in the informal economy, who may be disproportionately affected and are less resilient.
The greater impact of the crisis on workers and micro-enterprises already in a vulnerable situation in the labour market could well exacerbate existing working poverty and inequalities. Moreover, the crisis can potentially give rise to and deepen grievances, mistrust and a sense of injustice over access to health services and to decent jobs and livelihoods, leading to social tensions that could undermine development, peace and social cohesion. With the international community’s support, countries need to act swiftly to shore up their economies and protect jobs and incomes, taking into account the specific risks of certain groups.
The ILO’s four-pillar policy framework
The ILO has structured its key policy messages for response to the crisis around four pillars. Like any solid foundation, each pillar complements the others in sharing the weight of the enormous load faced by countries. International labour standards provide a tried-and-trusted blueprint for policy responses designed to facilitate a recovery that is sustainable and equitable. These standards make up the pedestal on which the four pillars rest.
International labour standards can serve as a “decent work compass” in the response to the COVID 19 crisis.1 First, upholding key provisions of these standards (particularly those dealing with safety and health, working arrangements, protection of specific categories of workers, non-discrimination, social security and employment protection) ensures that workers, employers and governments can maintain decent work while adjusting to the socio-economic consequences of the pandemic. Secondly, a wide range of ILO standards – covering such areas as employment, social protection, wage protection, the promotion of small and medium-sized enterprises, and workplace cooperation – contain specific guidance on policy measures that can be used to underpin a human centred approach to management of the crisis and to recovery efforts. The guidance provided by these standards is applicable to the specific situation of certain categories of workers (e.g. nursing personnel, domestic workers, migrant workers, seafarers and fishers) who, as has become clear, are extremely vulnerable to the effects of the crisis.
Adherence to international labour standards contributes, moreover, to a culture of social dialogue and workplace cooperation that is key to shaping the recovery and preventing a deterioration in employment and labour conditions during and after the crisis.
The ILO’s four-pillar policy framework, based on international labour standards, for tackling the socio-economic impact of the COVID-19 crisis
Pillar 1Stimulating the economy and employment
Pillar 2Supporting entreprises, jobs and incomes
Pillar 3Protecting workers in the workplace
Pillar 4Relying on social dialogue for solutions
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Some policy actions, notably social protection, not only support jobs and incomes (Pillar 2) but also protect workers in the workplace (Pillar 3) and are therefore cross-cutting. Those responsible for designing country-level strategies should draw on policy recommendations from each pillar, as appropriate, and take any cross-cutting elements into consideration.
1 ILO Why International Labour Standards matter in a public health crisis (March 2020)