The coronavirus pandemic has deeply impacted businesses causing an unprecedented collapse in economic activities over the last fast few months. India saw one of the world’s biggest GDP contractions in the April-June 2020 quarter, contracting by 23.9 percent. It is the worst fall since the country started reporting quarterly data in the year 1996. According to figures by the CEIC, during this same period, the USA saw a contraction of 9.1 percent, Germany contracted by 11.3 percent, and UK’s economy contracted by 21.7 percent.
According to the Asian Development Bank, developing economies in Asia will contract for the first time in 60 years. The International Labour Organization’s (ILO) most pessimistic scenario – assuming a second pandemic wave and return on restrictions, predicts slow recovery resulting in a loss of millions of full-time jobs.
It is estimated that close to 10 trillion dollars has been spent on supporting workers and the industry since the pandemic first began, however, 88 percent of that total is spent by advanced countries on advanced countries.
The path to recovery
The road to stability is going to be long and hard. In order to produce optimal sustainable labor market, the ILO states that there is a need to find the right balance and sequencing of health, economic, and social policy interventions. There’s also a need to protect and promote the vulnerable, disadvantaged groups. And sustaining policy interventions at the necessary scale as resources are likely to be limited.
Writing in Foreign Policy Magazine, International Monetary Fund Managing Director Kristalina Georgieva and Chief Economist Gita Gopinath noted that “Even as people return to work, employment rates in many countries have not returned anywhere close to pre-crisis levels…Job losses have hit younger and lower-skilled workers hard. Globally, the ILO estimates that the equivalent of 400 million (40 crore) full-time jobs were lost in the second quarter of 2020.
They also noted the importance and need for a medical intervention. “Though the world has learned to live with the virus, a full recovery is unlikely without a permanent medical solution. Lingering uncertainty about the virus and the fear of recurring outbreaks are weighing on mobility and the confidence of consumers and businesses. The availability of a vaccine, or therapies with proven success in treating COVID-19, will materially lift the global outlook.”