Will the COVID-19 Pandemic Trigger a Global Employment Freeze... Rising Concerns in Accommodation, Transportation, and Retail Sectors

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The spread of the novel coronavirus infection (COVID-19) is increasing global employment insecurity. As countries close borders and companies take measures such as halting factory operations and closing stores to prevent the spread of COVID-19, job losses continue. The International Labour Organization (ILO) has predicted that up to 25 million jobs could disappear in the worst-case scenario due to the impact of COVID-19, with the most concern focused on sectors with high employment shares such as accommodation, transportation, and retail.

◆ Accommodation, Transportation, and Retail 'Crisis' as Movement Declines... What About 100 Million People? = According to the Nihon Keizai Shimbun on the 22nd, about 100 million people are employed in accommodation, transportation, and retail sectors in the US, Europe, and Japan, accounting for about one-quarter of total employment. Although these sectors only represent 13% of the GDP in the US, Europe, and Japan, their presence in terms of employment is much greater. In this situation, as the spread of COVID-19 accelerates in the US and Europe, countries have implemented movement restrictions, and job losses in these three sectors are becoming a reality.

For example, the global hotel chain Marriott International has seen room occupancy rates in North America and Europe fall below 25%. The Wall Street Journal (WSJ) reported on the 21st (local time) that Marriott plans to temporarily lay off about two-thirds of its 4,000 employees at headquarters and some branches. Due to declining sales caused by the spread of COVID-19, they intend to implement these measures for about 60 to 90 days starting early next month. However, they stated that they plan to provide about 20% of their salary to support health insurance and other benefits for these employees.

Hotels owned by US President Donald Trump are also facing difficulties such as suspending operations or laying off staff. According to the Washington Post (WP) on the 21st (local time), at least four of President Trump's companies have suspended operations, and three hotels have laid off employees. The Trump International Hotel in Washington DC saw its reservation rate drop to about 5%, resulting in the layoff of 160 employees.

Additionally, Japan Airlines All Nippon Airways (ANA) is pushing for temporary leave for 5,000 flight attendants, and airlines in the US, Europe, and elsewhere have announced large-scale unpaid leave for employees. Airlines, which have been directly hit as countries close air routes to prevent the spread of COVID-19, have quickly taken these measures.

On the 18th, the ILO analyzed that if an economic recession occurs due to COVID-19, between 5.3 million and 24.7 million jobs could be lost worldwide. It emphasized that "restrictions on economic activities and people's movement affect both manufacturing and service industries," and that "travel, tourism, and retail sectors are particularly vulnerable." It added that policies to protect workers such as paid leave and telecommuting, active fiscal and accommodative monetary policies to stimulate economic and labor demand, and strengthening social safety nets are necessary to protect employment and income.

[Image source=AP Yonhap News]

[Image source=EPA Yonhap News]

◆ "Maintain Employment" Governments Worldwide Announce Measures One After Another = In response, governments around the world are announcing measures to maintain employment status one after another. The German government announced on the 19th that it will invest 40 billion euros (about 55.3 trillion KRW) to support self-employed and small businesses, including job protection measures. Previously, if companies reduced working hours by more than one-third, a significant portion of the lost wages was supported by social insurance, but this support has been expanded to include reductions of 10% or more. The support target has also been expanded to include not only regular employees but also non-regular workers.

The UK government also announced an 'Employment Retention Scheme' on the 20th. If companies keep employees on furlough or leave instead of laying them off, the government will cover up to 80% of their monthly wages, up to a maximum of ?2,500 (about 3.7 million KRW). Rishi Sunak, the UK Chancellor of the Exchequer, emphasized, "This is an unprecedented support where the government intervenes for the first time in history to pay people's wages on their behalf."

Japanese Prime Minister Shinzo Abe also urged representatives of small and medium-sized enterprises and the retail sector to maintain employment during a meeting on the 21st, as the possibility of employment contraction due to COVID-19 increased. He said, "Because we are asking to reduce activities themselves (to prevent the spread of COVID-19), the economy inevitably faces a recession," and added that although companies are in a difficult situation, the government will definitely support them if they maintain employment.

NHK reported that participants at the meeting suggested that to stimulate consumption, the Japanese government should directly distribute cash or vouchers and implement bold economic stimulus measures such as waiving highway tolls. They also requested further strengthening of financial support for small and medium-sized enterprises. Accordingly, it is reported that the government is considering a plan to partially cover meal and travel expenses for a certain period in the upcoming COVID-19 economic response measures to be announced next month, to support food service and tourism sectors that have seen a sharp decline in sales.

This content was produced with the assistance of AI translation services.