Coronavirus fallout has erased $3.5 trillion in workforce income, UN agency says

  • A new report from the International Labour Organisation details worse-than-expected damage in the global labour market and forecasts pain lasting through the fourth-quarter of 2020.
  • The United Nations agency expects working-hour losses to remain elevated through the third quarter at 12.1%, or 345 million full-time-equivalent jobs.
  • Global labour income is expected to shrink over the first three quarters of 2020 by 10.7%, or $US3.5 trillion, the ILO added.
  • The bulk of the fallout landed among middle-income nations, the agency said.
  • The ILO projected fourth-quarter working-hour losses to reach 8.6%, up from the previous estimate of 4.9%.
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The coronavirus’s labour-market hit has mostly been quantified by the amount of jobs lost and a rising unemployment rate. The International Labour Organisation — a United Nations agency — now projects the pandemic erased roughly $US3.5 trillion in worker income year-to-date.

The agency laid out its latest reading of the global labour market in a Wednesday report, highlighting lasting pain in the workforce while other economic indicators return to pre-pandemic highs.

Working-hour losses are expected to remain elevated through the third quarter at 12.1%, or 345 million full-time-equivalent jobs, the ILO said. Those losses signal a global drop in labour income of 10.7% over the first three quarters of 2020 compared to the year-ago period.

Second-quarter working-time losses landed above estimates. While the agency expected losses to reach 14%, or 400 million FTE jobs, Wednesday’s report pegs the total at 17.3%, or 495 million FTE jobs.

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Labour income losses were highest in middle-income countries, the agency said. Lower-middle-income countries saw losses reach 15.1%, while upper-middle-income countries’ losses hit 11.4%.

To be sure, ILO’s tally of wages lost doesn’t include income regained from government support measures, such as the US’s expansion of unemployment benefits. The agency estimates that increases to stimulus spending by 1% of gross domestic product would have shaved 0.8 percentage points from working-hour losses.

Had no stimulus been passed, global working-hour losses could’ve rocketed as high as 28% in the second quarter, ILO added.

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A global stimulus gap is also dragging lower- and middle-income nations’ economies at a disproportionate rate, according to the report. ILO estimates that such countries need to pass another $US982 billion in relief spending to match the aid seen in high-income nations. The stimulus gap is just 1% of the total value of stimulus packages passed by high-income countries, the agency noted.

ILO’s fourth-quarter outlook doesn’t leave much room for optimism. ILO estimated working-hour losses to total 8.6% from the year-ago period, or roughly 245 million FTE jobs. That’s up from a previous estimate of 4.9%, or 140 million FTE jobs.

The worsening outlook comes as Congress all but entirely gives up on passing new stimulus. Democrats and Republicans failed to reach a compromise through September as both parties stood apart on bill sizing and program allocations. Senate Republicans’ push to confirm a new Supreme Court justice also overshadowed plans to pass new fiscal relief.

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