Bloomberg News says that the bleak outlook on the US job market, the suspension of the salary support program in Britain and the end of the moratorium on declaring bankruptcy of troubled companies in Germany, present a darker picture of the future of the labor market in the world.
According to estimates by the International Labor Organization, the world will lose working hours equivalent to about 245 million permanent jobs during the last quarter of this year.
The last quarter of this year started with a sinister warning, as several major companies from Walt Disney Media and Entertainment to Royal Dutch Shell Energy and Continental German auto components announced last Thursday that thousands of jobs will be cut in just 24 hours.
The next day, the US Department of Labor revealed that job growth in the United States had slowed during last September, as more Americans gave up their search for work.
In addition to this questionable news, the main program to support the salaries of British companies will end later this month, while one of the main business organizations there said it expects to write off more than 60 thousand jobs in the coming weeks with the end of this program.
At the same time, the renewed rise in the number of people infected with the new Corona virus in major economies indicates the weakness of these economies, which have not yet recovered from the losses of the first wave of the pandemic. The recent outbreak of the virus in the French capital, Paris, for example, led to the announcement of the re-closure of bars for a period of two weeks, starting from Tuesday, and it could lead to the re-closure of restaurants. The same situation is repeated in London, according to local health officials.
Tim Aurelick, chief economist at Bloomberg News, says that the occurrence of a new wave of the Corona pandemic, mass job cuts in major American companies and the end of the salary support program in Britain, confirm the risk of high unemployment rates in the world by the end of this year.
The bad news for the urgent future outlook is also bad news in the medium term, with the intensification of fears that the economic recovery will falter as a result of deteriorating world market conditions, even after the discovery of an anti-Corona virus vaccine.
The US Federal Reserve published last Wednesday the minutes of the meeting of the Open Market Committee on Monetary Policy Management on September 15 and 16, where it indicated the details of discussions about the new committee’s directives regarding the conditions that will make it necessary to start increasing the US interest rate close to Zero percent currently.
The minutes also indicated that US monetary policy makers discussed the idea of increasing bond purchases to inject more cash into the US economy, as well as continuing strict restrictions on cash distributions to banks.
All eyes are on the Asia-Pacific region to monitor indicators of future economic developments, as the Central Bank of Australia will announce next Tuesday its decision on interest rates, while Prime Minister Scott Morrison is expected to announce a new economic stimulus package that includes spending on infrastructure projects and tax cuts aimed at extracting the Australian economy. From its first recession in nearly 30 years.
The world will lose hours of work equivalent to about 245 million permanent jobs during the last quarter of this year
Bank of Japan Governor Haruhiko Kuroda is also planning to address a conference next week, where he will address indicators of economic recovery and price expectations.
Markets are also awaiting the statements of European Central Bank officials, including Bank President Christine Lagarde and chief economist Philip Lane, during the current week, as it will be an opportunity to monitor any indications of whether the recent disappointing inflation data for the euro area will be sufficient to reinforce calls for a new package From economic stimulus measures.
Investors are awaiting the comments of the Bank of England officials to see if there is an intention to cut rates to less than zero percent. The same thing is repeated for northern European countries, especially after Norwegian Central Bank Governor Ostin Olsen surprised the markets with more pessimistic than expected comments last month.
And the International Labor Organization warned in a report last April that the continued decline in working hours around the world due to the outbreak of the Corona pandemic, means that 1.6 billion workers in the informal economy (half of the global workforce) face the risk of destroying their livelihoods.
The total unorganized workforce around the world is 2 billion, out of a total workforce of 3.3 billion people. “This is because of the closure measures or because they work in the sectors most affected.”
It is estimated that North and South America together will lose 12.4 percent of jobs, while Europe and Central Asia will lose 11.8 percent of their jobs, “and estimates for the rest of the major regions exceed 9.5 percent,” according to the organization.
The first month of the crisis in March saw a 60 percent decrease in the income of workers in the informal sector. “The percentage reached 81 percent in Africa and North and South America, 21.6 percent in Asia and the Pacific, and 70 percent in Europe and Central Asia.”
The report added, “More than 436 million establishments all over the world face severe risks of serious outages … and these establishments operate in the economic sectors most affected.”
For its part, and on this problem, the Organization for Economic Cooperation and Development (OECD) said that “a possible second wave of Corona virus, which could result in 80 million unemployed people in the developed countries of the world.”
The organization, which is based in the French capital, Paris, added in its report last July, “Work hours were ten times less in some countries, compared to the first few months of the 2008 financial crisis.”
She indicated two scenarios for the pandemic during the next 18 months, one of which is the continued decline of the virus to remain under control, and the other is the explosion of a second wave of its rapid spread.
She expects unemployment to remain high until 2021, indicating that it will reach about 10 percent in the OIC countries by the end of this year, compared to 5.3 percent at the end of 2019.
The organization warned of a rise in the unemployment rate to 12.6 percent in the event of a second wave of the pandemic, adding that expectations indicate only a gradual recovery.
“It is likely that the unemployment rate will remain at or above the peak level recorded during the global financial crisis,” she added.
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