The Path Forward: Post-COVID Future of Unemployment

It is the most foolish thing to fret over the future that has not happened yet, or to contemplate about the dead past. By doing so, one only spoils the present. We live in the present, and we must do so with mindfulness and wisdom, embracing the here and now.

Prediction for Immediate Future

Given the jobs that were lost between mid-April and mid-May, we can expect the unemployment rate to reach 20th percentile in the next report, which is expected to be issued in early June. However, what happens thereafter remains to be seen.

Impact on Unemployment in Informal Sectors

To fully understand the implications of unemployment, it is crucial to comprehend the proportion of employment within informal sectors. These informal sectors, comprising all private enterprises that are not registered and produce goods and services for sale, represent close to 60% of the global workforce, including agriculture. The remaining 40% are in formal sectors.

Characteristics of Informal Economy

People in the informal sector lack employment protection such as contracts, wage slips, and social insurance. Consequently, they are particularly vulnerable to economic downturns. During the current lockdown, this segment will face significant challenges in finding work, leaving them without a safety net if governments do not support them with their low or nearly non-existent savings.

Global Perspective and Recovery Timeline

The share of informal employment varies significantly across different regions. For instance, in developed countries, the informal sector represents around 20% of total employment. However, in countries like India and Indonesia, it skyrockets to approximately 85%. Given this global disparity, the economic cost of the COVID-19 pandemic on the informal sector is bound to be formidable.

According to recent projections, a full recovery of jobs is anticipated to take up to 10 years. Reflecting on the current state, I recently went for a haircut and noticed that three out of four restaurants in the shopping center were closed, with only one remaining operational. This serves as a stark reminder of the immediate impacts on the informal sector.

Without immediate and substantive support from governments, the road to economic recovery for these informal workers will be long and arduous. The welfare measures put in place by governments to support this segment of the population will undoubtedly increase the economic burden of the pandemic for these countries.

It is imperative that we focus on the present and support those most vulnerable. Only then can we navigate the path forward towards a sustainable economic recovery in the post-COVID era.