UN warns estimate of 25 million unemployed by virus is too low

‘The projection will be much bigger, far higher than the 25 million we estimated’ warns ILO director.

India workers
Migrant workers board a bus to return to their villages during a 21-day nationwide lockdown to limit the spread of coronavirus disease in Ahmedabad in India, where millions had to walk hundreds of miles back to their villages after transport shut down [Amit Dave/Reuters]

Global job losses from the coronavirus crisis could far exceed the 25 million estimated just days ago, United Nations officials said on Thursday, as United States jobless claims surged to record levels, starkly showing the scale of the economic disaster.

The International Labour Organization (ILO), a United Nations agency, had estimated a week ago that, based on different scenarios for the impact of the pandemic on growth, the global ranks of the jobless would rise by between 5.3 million and 24.7 million.

However, Sangheon Lee, director of the ILO’s employment policy department, told Reuters news agency in Geneva on Thursday that the scale of temporary unemployment, layoffs and the number of unemployment benefits claims were far higher than first expected.

“We are trying to factor the temporary massive shock into our estimate modelling. The magnitude of fluctuation is much bigger than expected,” he said.

“The projection will be much bigger, far higher than the 25 million we estimated.”

By comparison, the 2008 to 2009 global financial crisis increased global unemployment by 22 million.

In the US where, as in many parts of the world, measures to contain the pandemic have brought the country to a sudden halt, the number of Americans filing claims for unemployment benefits surged to more than three million last week.

That shattered the previous record of 695,000 set in 1982. Economists polled by Reuters news agency had forecast claims would rise to one million, though estimates were as high as four million.

The data added to an alarming scenario spelled out by James Bullard, president of the Federal Reserve Bank of St Louis, who warned that up to 46 million people in the country – nearly a third of US workers – could lose their jobs in the short term.

Indian lockdown 

Countries across the world are feeling the intense human and economic pain wrought by the coronavirus, which has infected more than 470,000 people, killed more than 21,000, and is expected to trigger a global recession.

In India, where Prime Minister Narendra Modi announced a 21-day nationwide lockdown this week to stem the spread of the disease, industry groups warned job losses could run into the tens of millions.

Garish Oberoi, treasurer of the Federation of Associations in Indian Tourism & Hospitality, told Reuters that the trade group estimates that about 38 million jobs could be lost in the tourism and hospitality sector alone.

Among those hardest hit will be India’s estimated 120 million migrant labourers, for whom the lockdown means wages are disappearing. Many cannot afford rent or food in the cities and, with transport systems shut down, many have now begun to walk hundreds of miles to return to their villages.

In Europe, France is pulling out the stops to persuade companies not to fire their employees, including through a scheme that allows businesses to reduce worker hours without the employee taking a massive pay hit.

France’s Labour Ministry said nearly 100,000 French companies have asked the government to reimburse them for putting 1.2 million workers on shorter or zero hours since the outbreak, with more than half of requests coming on Monday and Tuesday.

‘Unemployment crisis’ 

In the United Kingdom, the government said 477,000 people had applied over the past nine days for Universal Credit, a payment to help with living costs for those unemployed or on low incomes. The Resolution Foundation think-tank said that was an increase of more than 500 percent from the same period in 2019.

It said the jump showed that the country was “already in the midst of an unemployment crisis that is building much faster than during the financial crisis”.

Ireland’s unemployment rate could meanwhile soar to around 18 percent by the summer from 4.8 percent last month, the Economic and Social Research Institute think-tank said on Thursday, projecting a recession with output contracting by 7.1 percent in 2020.

“Unemployment is extremely sensitive and volatile in response to economic activity, that is quite worrisome in our view,” said Lee of the ILO. 

“The sentiment among businesses is maybe it will take more time to get back to normal activities,” he said. “They are making quick decisions to adjust their workforce rather than keeping workers.” 

Source: Reuters