An Assignment

On
Covid 19 and its impacts on employment- International Perspective

Course Title: Strategic Human Resource Management

Course Code: HRM-612

Submitted To-
Farhad Hossain
Assistant professor
(HRM)
Business Administration

Submitted By-
Sharmen Akter
ID NO: 2011017005
Section: B
Program: MBA
Department: Business Administration.

Date of Submission: 19-09-2020

 EXECUTIVE SUMMARY

This assignment based on the partial requirement for the degree of Masters in
Business Administration (MBA) in Leading University Bangladesh. This
assignment attempted to highlight Covid 19 and its impacts on employment :
International Perspective. The assignment tried to furnish the overview of the
impacts of employment for covid-19.

The Covid-19 pandamic has disrupted every aspect of our lives. Even before the
onset of the crisis, the social and economic integration of young people was an
ongoing challenge. Now, unless urgent action is taken, young people are likely
to suffer severe and long-lasting impacts from the pandemic.
 Table of Content

Index Page No
Introduction 1-2
The employment impacts of covid-19 3-4
Sectors most at risk 5-7
Workers in the informal economy 8
Disparities in unemployment 9-11
Employment 12-13
Conclusion 14
References 15
 Abstract
COVID-19 abruptly impacted the labor market with the unemployment rate jumping to 14.7
percent less than two months after state governments began adopting social distancing
measures. Unemployment of this magnitude has not been seen since the Great Depression.
This paper provides the first study of how the pandemic impacted minority unemployment
using CPS microdata through April 2020. African-Americans experienced an increase in
unemployment to 16.6 percent, less than anticipated based on previous recessions. In
contrast, Latinx, with an unemployment rate of 18.2 percent, were disproportionately hard hit
by COVID-19. Adjusting for concerns of the BLS regarding misclassification of
unemployment, we create an upper-bound measure of the national unemployment rate of 26.5
percent, which is higher than the peak observed in the Great Depression. The April 2020
upper-bound unemployment rates are an alarming 31.8 percent for blacks and 31.4 percent
for Latinx. Difference-in-difference estimates suggest that blacks were, at most, only slightly
disproportionately impacted by COVID-19. Nonlinear decomposition estimates indicate that
a slightly favorable industry distribution partly protected them from being hit harder by
COVID-19. The most impacted group are Latinx. Difference-in-difference estimates
unequivocally indicate that Latinx were disproportionately impacted by COVID-19. An
unfavorable occupational distribution and lower skills contributed to why Latinx experienced
much higher unemployment rates than whites. These findings of early impacts of COVID-19
on unemployment raise important concerns about long-term economic effects for minorities.
INTRODUCTION

The sudden outbreak of COVID-19 has affected the entire world. To slow the spread of the
contagious disease governments have enforced stringent social distancing (i.e. “shelter-in-
place” and “stay-at-home”) restrictions that have mostly shut down businesses and laid off
workers in jobs and industries deemed non-essential and severely reduced demand for other
businesses. The effects on the economy are readily observed through a tumultuous stock
market, surge in unemployment insurance claims, and shuttering of many store fronts across
the country. What is less well known, however, is whether these effects are being felt
differently across the population, especially among economically disadvantaged groups such
as African-Americans and Latinx. Because of limited savings and wealth these groups are
especially vulnerable to negative economic shocks such as layoffs from COVID-19 (Canilang
et al. 2020).

The unemployment rate among blacks in the United States has been roughly double that of
whites for several decades. For example, over the past four decades, the average rate of
unemployment was 11.7 percent for blacks versus 5.4 percent for whites. Historical analyses
over the past century and a half indicate that the 2:1 ratio of black-to-white unemployment
rates first emerged in the 1950s (Fairlie and Sundstrom 1997, 1999). In his classic study of
black unemployment, Freeman (1973) finds that black employment is more volatile than
white employment and that the unemployment rate for blacks rises more than that for whites
when the economy weakens (concluding that it supports “the widely asserted last in, first out
pattern of black employment over the cycle”). Refining the analysis to focus on
unemployment transitions, blacks are found to be the first “fired” as the business cycle
weakens, but not necessarily the last hired (Couch and Fairlie 2010). They are also more
likely to transit out of the labor force when leaving employment than whites. The Great
Recession is found to also negatively impact minority unemployment, and recent research
shows that Latinx also have higher unemployment rates and cyclical sensitivity than whites
(e.g. Couch, Fairlie and Xu 2018; Hoynes, Miller, and Schaller 2012; Orrenius and Zavodny
2010).1

In this paper, we explore how COVID-19 affected minority unemployment. We explore two
main questions. First, we examine whether COVID-19 disproportionately impacted African-
Americans and Latinx relative to whites. In light of the well documented “first fired” pattern
and persistently higher unemployment among blacks, we might expect to see unemployment

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rise by twice as much for blacks as for whites, and Latinx unemployment to lie between
those groups. But, COVID-19 is different than previous recessions due to health-related
mandated business closures and might result in different new disproportionate impacts by
race, for which even the direction is theoretically unknown. Second, we explore more
generally how COVID-19 has differentially affected unemployment across job and skill
types that in turn have ramifications for racial disparities in unemployment. Did the
industries, occupations and skill levels of white workers insulate them from job losses due to
shelter-in-place restrictions relative to minorities? Or, were minorities more likely to be in
essential jobs and industries?

rates than whites. Finally, we find that occupational and educational differences contribute
to why blacks have higher unemployment rates in the early stages of the pandemic.

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The employment impacts of COVID-19

Employment adjustment typically follows economic contraction with some delay (see, for
example, the increase in the unemployment rate following the global financial crisis in 2009).
In the current crisis, employment has been impacted directly as a result of lockdowns and
other measures and on a greater magnitude than initially predicted at the start of the
pandemic, including when the first ILO Monitor was prepared. For this reason, this second
Monitor presents new global, regional and sectoral estimates that aim to capture the effect of
the crisis as it stands at present (particularly in terms of the effects of the containment
measures). Nonetheless, uncertainty around the further evolution of the crisis implies that
these updated estimates stand as the best possible indications of the current impact on labour
markets based on available data.

The most severe crisis since the Second World War: Employment losses are rising
rapidly around the world To more accurately capture the current features of the COVID-19
crisis, the ILO methodology for generating global estimates has been revised to provide
updated figures on the impact on the labour market. The latest estimates are based on a new
ILO “nowcasting” model, which relies on realtime economic and labour market data to
predict the loss in working hours in the second quarter of 2020 (on the basis of data available
on 1 April) (see Technical annex 2 for more details on the methodology). The global
estimates from the ILO’s nowcasting model show that the crisis is causing an unprecedented
reduction in economic activity and working time. As of 1 April 2020, estimates indicate that
working hours will decline in the current quarter (Q2) by around 6.7 per cent, which is
equivalent to 195 million full-time workers (assuming a 48-hour working week).2 This
implies that many of these workers will face a loss of income and deeper poverty, even if
substitute activities can be found (e.g. returning to agriculture in rural areas). The largest
decline is expected in upper-middle-income countries, but the impact is comparable across all
income groups.

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Table 1. Crisis is leading to a severe decline in working hours and employment (FTE)

Note: Note: (1) Magnitudes above 50 million are rounded to the nearest 5 million,
magnitudes below that threshold are rounded to the nearest million; (2) The full-time
equivalent employment losses are presented to illustrate the magnitude of the estimates of
hours lost. Their interpretation is the estimate of the reduction in hours worked, if those
reductions were borne exclusively and exhaustively by a subset of full-time workers and the
remaining workers did not experience any hour reduction. The figures should not be
interpreted as numbers of jobs actually lost nor increases in unemployment. See Technical
annex 2 for full details of the estimation methods.

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The eventual increase in global unemployment over 2020 will depend substantially on how
quickly the economy will recover in the second half of the year and how effectively policy
measures will boost labour demand. As it stands, there is a high risk that the increase in the
global number of unemployed at the end of 2020 will be significantly higher than the initial
projection (25 million) in the ILO’s first Monitor. The production losses for many enterprises
are also likely to be devastating and longlasting, especially in developing countries where the
fiscal space for economic stimulation is restricted.

Beyond unemployment: Work at risk Through the massive economic disruption and impact
on working hours, the COVID-19 crisis is affecting the world’s workforce of 3.3 billion.
However, the shock to the labour market is far from uniform, with specific sectors bearing
the brunt of the collapse in economic activity.

Sectors most at risk

Many of those still working, especially health workers, are at the frontline, fighting the virus
and making sure that people have their basic needs met, including workers in transport,
agriculture, and essential public services. Globally, there are 136 million workers in human
health and social work activities, including nurses, doctors and other health workers, workers
in residential care facilities and social workers, as well as support workers, such as laundry
and cleaning staff, who face serious risk of contracting COVID-19 in the workplace.
Approximately 70 per cent of jobs in the sector are held by women.

Based on real-time economic and financial data, the impact of the crisis on economic output
can be assessed at the sectoral level (with limitations to disaggregation due to available global
data). Drawing from this assessment, a number of key economic sectors can be identified as
suffering from a drastic fall in output, including accommodation and food services,
manufacturing, wholesale and retail trade, and real estate and business activities (table 2).
These sectors are labour intensive and employ millions of often low-paid, low-skilled
workers, particularly in the case of accommodation and food services and retail trade. The
economic risks will be felt particularly hard by workers in these sectors.

These sectors employ 1.25 billion workers around the world, representing almost 38 per cent
of the global workforce. Depending on the country context, these workers are facing a drastic
and devastating reduction in working hours, wage cuts and layoffs, and are likely to form the
bulk of the estimates from the nowcasting model presented above.

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Of the economic sectors most affected, the wholesale and retail trade segment represents the
largest share of workers, who are typically low paid and unprotected. This group of 482
million workers includes, among others, checkout clerks, stockers, shopkeepers and workers
in related jobs. Workers in this sector who are engaged in activities deemed essential (e.g.
food distribution) may continue to work, but they face greater occupational health risks.
Workers in non-essential businesses face widespread closures and sharp reductions in
employment and hours.

accommodation and food services sector is also severely affected, accounting for 144 million
workers. This sector is suffering from almost full closure in some countries and a steep
decline in demand in cases where operations can continue. More than half of these workers
are women.

The manufacturing sector, which employs 463 million workers, has been hit hard in some
segments, as workers are told to stay at home, factories close, and global supply chains grind
to a halt. Quarantine measures, closure of retail stores, cancelled orders and salary reductions
are suppressing demand in key industries such as automobiles and textiles, clothing, leather
and footwear. The transport, storage and communication industry accounts for 204 million
jobs around the world, including airline pilots and crew members, drivers, postal and other
delivery workers, as well as people who work in warehouses that support transport and global
supply chains. While some of these workers are negatively affected (e.g. those in the airline
industry), others continue to meet the increased demand for online retail.

Although the economic impact has not yet been felt in agriculture, the largest sector in most
of developing countries, risks of food insecurity are emerging due to containment measures,
including border closures. Over time, workers in this sector may be increasingly impacted,
particularly if the virus spreads further into rural areas.

In terms of regional differences, the share of employment in at-risk sectors varies from 26.4
per cent in Africa to 43.2 per cent in the Americas. However, other regions have higher
shares of informality, particularly Africa, with lower levels of social protection coverage.
Though these regions do not yet have high death rates due to COVID-19, the virus is
currently spreading rapidly in a number of developing countries where the nexus between
informality, weak capacity and high-density populations poses severe health and economic
challenges for governments.

6
The sectoral analysis shows that not all sectors and not all types of workers are equally
affected. It also shows that many of those most affected are those who are already low-wage
workers and have less access to social protection coverage. As such, this can have a further
negative impact on already existing inequality.

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Workers in the informal economy

Around 2 billion people work informally, most of them in emerging and developing
countries. The informal economy contributes to jobs, incomes and livelihoods, and in many
low- and middle-income countries it plays a major economic role. However, informal
economy workers lack the basic protection that formal jobs usually provide, including social
protection coverage. They are also disadvantaged in access to health-care services and have
no income replacement if they stop working in case of sickness. Informal workers in urban
areas also tend to work in economic sectors that not only carry a high risk of virus infection
but are also directly impacted by lockdown measures; this concerns waste recyclers, street
vendors and food servers, construction workers, transport workers and domestic workers.

COVID-19 is already affecting tens of millions of informal workers. In India, Nigeria and
Brazil, the number of workers in the informal economy affected by the lockdown and other
containment measures is substantial (figure 3). In India, with a share of almost 90 per cent of
people working in the informal economy, about 400 million workers in the informal economy
are at risk of falling deeper into poverty during the crisis. Current lockdown measures in
India, which are at the high end of the University of Oxford’s COVID-19 Government
Response Stringency Index, have impacted these workers significantly, forcing many of them
to return to rural areas.

Countries experiencing fragility, protracted conflict, recurrent natural disasters or forced

displacement will face a multiple burden due to the pandemic. They are less equipped to
prepare for and respond to COVID-19 as access to basic services, especially health and
sanitation, is limited; decent work, social protection and safety at work are not a given; their
institutions are weak; and social dialogue is impaired or absent.

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Disparities in Unemployment

Unemployment rates by race for April 2020 and other time periods for comparison
(also see Figures 2-5). The unemployment rate was alarmingly high in April 2020. The U.S.
unemployment rate hit 14.5 percent which was the highest level since the Great Depression
and roughly 5 percentage points (or 50 percent) higher than the peak during the Great
Recession. All racial groups experienced massive increases in unemployment in April 2020.
The unemployment rate hit 16.6 percent for African-Americans and 12.8 percent for whites
(which we measure as white non-Hispanic throughout). The highest level was for Latinx at
18.2 percent. Asians experienced an unemployment rate of 13.7 percent.

Unemployment rate increased by 13.5 percentage points for Latinx which was the
largest increase for any group. Asians also experienced a relatively large increase in
unemployment from one month prior to social distancing restrictions and one month into
those restrictions. Comparisons to January 2020 reveal similar sharp increases in
unemployment rates. Interestingly, from January to April 2020, the increase in black
unemployment rates was 9.8 percentage points, almost identical to the increase for whites
of 9.7 percentage points.

Unemployment rates measured in March of 2020 began to reveal changes from earlier
months, but were only a fraction of the size of increases observed in April 2020. Restrictions
in most localities across the United States were put in place after mid-month following data
collection for the March survey. The BLS (April 2020) notes “the March survey reference
periods for both surveys predated many coronavirus-related business and school closures in
the second half of the month.” Thus, we focus on comparisons between April 2020, February
2020 and other time periods.

Using the period from January 2017 to December 2019, we find that black
unemployment at 6.8 percent was 3.5 percentage points higher than for whites (again
displaying the roughly 2:1 ratio). Latinx unemployment was 4.6 percent which was 1.4
percentage points higher than white rates.

Comparing what is happening due to COVID-19 and the previous recession is

illustrative. In the Great Recession, black unemployment rates were 11.4 percent which was
5.8 percentage points higher than white rates. Latinx unemployment rates were 8.7 percent
(3.1 percentage points higher than white rates). In previous work, we find that the

9
disproportionate increase in unemployment among blacks and Latinx was due to increased
job loss, which is consistent with widely asserted “first fired” patterns (Couch and Fairlie
2000; Couch, Fairlie and Xu 2018). The 2:1 ratio holds roughly over the business cycle for
blacks resulting in much larger racial gaps in unemployment rates measured in percentage
points.

Figure 1: Total confirmed COVID-19 cases and deaths at the global level during the survey
period

Data source: European Centre for Disease Prevention and Control (ECDC), Our World in
Data.

During the survey period, some governments introduced stringent policy measures designed
to slow the spread of the COVID-19 pandemic. Figure 2 plots the Stringency Index of the
Oxford COVID-19 Government Response Tracker over the survey period for the countries
represented in the survey.' Almost all survey respondents lived where school closures were
mandatory for either a part of or the entire country. Around half of the respondents (48.3 per
cent) who participated at the beginning of the survey period lived in countries where closure
of all but essential workplaces was required, compared to only around 10 per cent towards the
end. Overall, at the time of participating in the survey, one-quarter (25.5 per cent) of the
sample lived in countries where all but essential workplaces were required to close, and a
further two-thirds of youth in the sample (68 per cent) lived in countries where workplaces
were closed for some sectors and categories of workers.8 In such a dynamic and

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unprecedented context, the right of young people to participate must be upheld. Young
people's perceptions, actions and aspirations are critical in identifying sources of vulnerability
and informing policy actions. Giving young people a voice in decision-making to articulate
their needs and ideas not only improves the effectiveness of policies and programmes, but
also gives youth the chance to participate in their delivery.

Figure 2 Lockdown measures imposed by governments during the survey period

Note: The graph depicts scores provided by the Oxford COVID-19 Government Response
Tracker for the duration of the survey period (21 April 2020 to 21 May 2020). For each day
the (five-day rolling) average of all survey respondents is plotted based on the scores of
respondents' countries of residence. Averages are estimated through a fixed-effects model
including dummies for each country-gender combination to minimise sample composition
effects when identifying time trends. Survey weights are used as described in Box 1. Data
source: Oxford COVID-19 Government Response Tracker.

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EMPLOYMENT

Even before the COVID-19 outbreak, young people faced a tough labour market. Young
people aged 15-24 were around three times more likely to be unemployed than those aged 25
and over (ILO, 2020c). The COVID-19 crisis is expected to create more obstacles for young
people in the labour market: for jobseekers, a lack of vacancies is expected to lead to longer
school-to-work transitions, while young workers risk losing their jobs amid the current wave
of lay-offs and the collapse of businesses and start-ups (ILO, 2020b). Prior to the outbreak,
globally, 178 million youth were employed in the sectors hit hardest by the crisis, such as
accommodation and food services, wholesale and retail trade, manufacturing, real estate and
other business activities (ILO, 2020a). It is against this backdrop that this section describes
the impacts that the crisis is having on the jobs, incomes and productivity of the young
workers in the Global Survey on Youth and COVID-19.

Stopped working since the onset of the pandemic One in six young people aged 18-29 (17.4
per cent) had stopped working since the onset of the crisis — highlighting the dramatic
impact it is having on youth labour markets all around the world (figure 4). Those who have
stopped working comprise the young people who had already lost their jobs (6.9 per cent), as
well as those who reported being in employment but having worked zero hours since the
onset of the crisis (10.5 per cent). The latter group may include youth in wage employment
with temporary job losses, for example, as a result of furloughing,' and youth in self-
employment, own-account workers or contributing family workers who had halted income-
generating activities. While the differences between young women and men are small,
countries at all income levels have experienced falls in youth employment. Younger youth
aged 18-24 were more likely to stop working. Almost one-quarter (23.1 per cent) of
respondents aged 18-24 who worked before the COVID-19 outbreak had stopped working,
compared to 13 per cent among older youth (aged 25-29) and 10.6 per cent in the 30-34 age
cohort (see comparable results for the United Kingdom in box 2). Furthermore, youth (aged
18-29) were more prone to losing their jobs than those aged 30-34. A closer examination
shows that 40 per cent of those aged 18-29 who had stopped working gave job losses as the
reason, compared to 29 per cent among those aged 30-34.

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Comparable findings on youth employment in the United Kingdom A nationally
representative survey of adults in the United Kingdom conducted between 6-11 May 2020
found, overall, that 18 per cent of employees had stopped working, with younger age groups
hardest hit: 33 per cent aged 18-24,20 per cent aged 25-29, and 19 per cent aged 30-34 had
stopped working since the onset of the pandemic. One in three employees aged 18-24 had
seen their pay reduced. Source: Gustafsson (2020).

Figure 4 Share of respondents who reported having stopped working after the onset of the
pandemic

Note: The graphs plots the share of all respondents working before the onset of the pandemic
who (i) declared to have lost their job since the start of the coronavirus outbreak or (ii)
declared to be working but reported zero daily hours of work during the outbreak. Breakdown
for women and men as well as by occupation only includes observation for respondents aged
18-29. Occupations are based on the ISCO-08 classification with "Managers" corresponding
to ISCO-08 Major Group 1, "Professionals" to ISCO-08 Major Group 2, "Technicians &
associate professionals" to ISCO-08 Major Group 3 and "Support, service and sales workers"
to ISCO-08 Major Groups 5 to 9.N: 3,615 (respondents aged 18-29) of which information on
occupation is available for 2,483 respondents. N: 1,042 (respondents aged 30-34).

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Conclusion:

As pandemic just spread in the end of this pandemic is uncertain. In this situation recovery
from disease is the main concern rather than considering the economic impact. Overall, the
current economic situation may seriously undermine the livelihood of the underprivileged
cohort of the population. Lack of access to basic healthcare, knowledge of hygiene and social
safety net has always been a challenge for this cohort and the pandemic is likely to increase
these challenges, exponentially.

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References:

1. WHOa. (World Health Organization): Coronavirus disease (COVID-2019) situation

reports.2020.https://www.who.int/emergencies/diseases/novel-
coronavirus2019/situationreports/. Retrieved 09 March 2020. 2020.

2. Uddin, M. B., Hasan, M., Rashid, A.H.A., Ahsan, M. I., Imran, M. A. S.,. Ahmed. S. S.,
U.(2020). Novel Coronavirus (COVID-19): Molecular Evolutionary Analysis, Global
Burden and Possible Threat to Bangladesh. Nature Research. *(preprint) 16

3. WHOb. Statement on the second meeting of the International Health Regulations

(2005) Emergency Committee regarding the outbreak of novel coronavirus (2019-
nCoV)". World Health Organization. 30 January 2020. Archived from the original on
31 January 2020. Retrieved 30 January 20.

4. "WHOssssssssssssssssssc-General's opening remarks at the media briefing on COVID-

19—11 March 2020". World Health Organization. 11 March 2020. Retrieved 11
March2020.

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