COVID-19 Has Destroyed 22 Million Jobs in OECD Countries

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Around 22 million people in industrialized countries lost their jobs in 2020 due to the effects of the pandemic, according to the Employment Outlook 2021 report by the Organization for Economic Cooperation and Development (OECD).

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The OECD goes on to say that there is little chance that economies will be able to return to their former employment rate even by the end of next year. Of the 22 million jobs lost, 8 million are unemployed and the remaining 14 million are considered inactive.

Recovery is not expected to be achieved by the end of 2022

Globally, the pandemic’s toll on the labor market resulted in the loss of around 114 million jobs in 2020. The OECD warns that developed countries were still halfway to a full recovery in employment levels at the end of last year and expects “a recovery until the pandemic level will not be reached by the end of 2022.”

CNBC reports that about 21 million jobs have been saved through employment protection programs, but rich countries are at risk of rising long-term unemployment rates.

Although the OECD unemployment rate fell from 6.7% in April to 6.6% in May, at 43.5 million unemployed it is still 1.3% above the pre-February 2020 pandemic level compared to 35.4 in February 2020.

With that in mind, the under-25 unemployment rate was 13.6% in May 2021, still above the pre-pandemic 11.4%, albeit with significant differences between countries.

The OECD claims that around 60 million jobs were supported at the height of the crisis, more than ten times more than during the financial crisis, contributing to savings of around 21 million.

Withdrawal of support too early could jeopardize recovery

According to OECD data, it took a whole decade for youth employment to return to normal levels after the global financial crisis of 2008. Stefano Scarpetta, Labor Director for the organization, said the key message was “To do better this time. We cannot allow young people to be so badly affected. “

The story goes on

With this in mind, the Secretary General of the OECD, Mathias Cormann, said: “Withdrawing support too quickly could jeopardize the recovery.”

Meanwhile, the US Federal Reserve is nearing premature asset purchases as the rebound in inflation and steady economic recovery lead investors to speculate on an early withdrawal of stimulus packages.

Cormann stresses that the short-term cost of financial support can be mitigated by targeting aid more specifically to the most vulnerable sectors, businesses and households, while encouraging new business and job creation.