"Millions of Jobs Will Disappear Even After COVID-19 Ends"...Concerns Over Sharp Decline in Service Industry Jobs

Despite Slowdown in COVID-19 Spread, Unemployment Rates Remain Steady Worldwide
OECD Average Unemployment Rate at 6.88%...Higher Than Pre-COVID Levels
COVID-Accelerated Robotization...Concerns Over 5 Million Job Losses Annually

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Even if COVID-19 ends, U.S. research institutions have issued pessimistic forecasts that millions of jobs will disappear, making it difficult for employment recovery rates to return to pre-COVID-19 levels. Even after the COVID-19 crisis ends, more than 20% of employees are expected to continue working from home, making it difficult for unemployment rates among service workers targeting office workers to improve. In fact, although vaccination campaigns began in earnest worldwide at the end of last year and the spread of COVID-19 started to slow, there has been little change in unemployment rates.

The Washington Post (WP) cited a recent report from the McKinsey Global Institute on the 17th (local time), stating, "Even if the COVID-19 crisis ends, business trips will decrease by more than 20% compared to before, and about 20% of all workers will enter indefinite remote work." It added, "This means a reduction in office workers commuting to work, and as a result, millions of jobs in service sectors such as hotels, restaurants, and stores are likely to disappear."

In fact, unemployment rates in OECD member countries, including the U.S., have not improved rapidly despite the start of vaccinations and the slowdown of the third wave of COVID-19 at the end of last year. The average unemployment rate of 37 OECD member countries was 6.88% in December last year, the same as the previous month. This remains higher than the 5.23% recorded in December 2019, just before the COVID-19 crisis. The average unemployment rate among OECD member countries rose to 8.87% in April last year when the U.S. and Europe imposed full lockdowns, but has since decreased, although the downward trend is slowing.

The official U.S. unemployment rate announced by the U.S. Department of Labor last month was 6.3%, a significant decrease from 14.8% in April last year, but still nearly twice as high as the 3.4% recorded in December 2019 before the COVID-19 crisis.

The U.S. research institution Pew Research Center also analyzed that employment recovery among service workers in U.S. hotels and restaurants is slow. According to Pew Research Center, as of the end of last year, employment in low-wage service jobs such as waiters and retail salespersons earning the federal minimum wage of $15 per hour (about 16,500 KRW) or less decreased by 12.5% compared to the previous year. Although this is an improvement from the more than 33% drop during the full COVID-19 lockdown, the decrease still remains in double digits compared to the previous year.

Additionally, Pew Research Center pointed out that many unemployed people view their job prospects pessimistically as employment recovery in low-wage service jobs progresses slowly. In a survey conducted from the 19th to the 24th of last month, about 49% of current unemployed respondents said they believe it will be difficult to find jobs with similar working conditions or wages to their previous jobs in the near future.

The reason why employment rates in low-wage labor positions have not recovered despite the slowdown in COVID-19 spread is attributed to automation accelerated by COVID-19. According to the British daily The Times, a robot waiter was recently introduced for the first time at Hotel Sky in Johannesburg, South Africa. Despite South Africa’s unemployment rate exceeding 30%, luxury hotels are increasingly adopting robot waiters as part of COVID-19 prevention measures. China’s state-run CCTV also recently reported that the largest hot pot chain in China, Shabu Shabu, introduced serving robots as part of COVID-19 prevention measures, reducing staff by 30% compared to before.

As robotization aimed at COVID-19 prevention begins in developing countries as well, the global unemployment problem is expected to worsen. According to CNBC, a joint study by Bank of America (BOA) and Oxford University in November last year projected that due to robotization, approximately 7.1 million existing jobs worldwide will decrease annually, while only 2 million new jobs will be created, resulting in a net loss of 5.1 million jobs per year.

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