Global Worker Wages Lost Due to COVID-19 Total 4,000 Trillion Won

ILO Report... 10% Decrease Compared to Last Year Mainly in Underdeveloped Countries
Working Hours Reduced More Than Expected... Consumption Decline → Economic Recovery May Slow Down

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The total global wage loss for workers worldwide this year due to the impact of the novel coronavirus infection (COVID-19) has exceeded 400 trillion won. With the resurgence of COVID-19 and other factors, the employment market is unlikely to improve in the near future, raising concerns that this will lead to a vicious cycle of income reduction and consumption contraction.

The International Labour Organization (ILO) estimated in its report "COVID-19 and the World of Work" on the 23rd (local time) that global labor wages from January to the end of August (Q1 to Q3) this year decreased by 10.7% compared to the same period last year. In monetary terms, this amounts to $3.5 trillion (approximately 407.05 trillion won), equivalent to 5.5% of the world's Gross Domestic Product (GDP). By region, the Americas, combining North and Latin America, saw the largest decrease at 12.1%, followed by Africa (10.7%), Europe and Central Asia (10.6%), the Arab region (10.2%), and Asia-Pacific (9.9%).

By income level, countries with a per capita GDP between $746 and $2,975 according to the World Bank experienced the largest wage decline of 15.1% compared to the same period last year. Countries with a per capita GDP between $2,976 and $9,205 and low-income countries with less than $745 per capita GDP saw decreases of 11.4% and 10.1%, respectively. High-income countries with per capita GDP above $9,206 experienced a relatively smaller income loss of 9.0% compared to other groups.

The impact of COVID-19 on the labor market is greater than initially expected. Due to the pandemic, social distancing and lockdown measures have been implemented, leading to reduced working hours. This ultimately results in income reduction. The estimated global labor hour loss for the second quarter was 14% as of last June, but the current report raises this to 17.3%. This is equivalent to the loss of jobs for 495 million full-time workers. The ILO forecasts that labor hours will decrease by 12.1% in the third quarter and 8.5% in the fourth quarter compared to the previous year, meaning the loss of 345 million and 245 million full-time jobs, respectively.

As unemployment rises and wages fall, consumption decreases, leading to a vicious cycle of further job losses. Ultimately, economic recovery becomes even more difficult. Guy Ryder, ILO Director-General, explained, "This phenomenon is occurring as COVID-19 resurges in some parts of the world," adding, "Workers from underdeveloped countries working abroad are suffering greater damage than during previous economic recessions before COVID-19."

The ILO noted that governments' large-scale fiscal spending during the COVID-19 situation helped partially prevent job losses, estimating that stimulus measures equivalent to 1% of annual GDP during the second quarter reduced labor hour losses by an average of 0.8 percentage points. The ILO stated, "Without government stimulus measures, global labor hour losses could have reached 28%."

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