ILO Monitor: COVID-19 and the world of work. Eighth edition

1 X ILO Monitor: COVID-19 and the world of work . Eighth edition Updated estimates and analysis27 October 2021 Key messagesLatest labour market developmentsReturn to workplace and vaccination: Slow progress in low- and middle-income countriesProgress in vaccination has emerged as a critical factor for labour market recovery. In early October, the share of fully vaccinated people globally reached per cent however, with considerable differences between high-income ( per cent) and low-income countries ( per cent). Higher vaccination rates are associated with less stringent workplace restrictions. Overall, workplace closures have become increasingly targeted at specific areas and worked: A stalled global recoveryGlobally, labour market recovery from the pandemic shock has stalled during 2021, with little progress being made since the fourth quarter of 2020.

2 Global working hours in 2021 are estimated to remain significantly below the level attained in the last quarter of 2019, at per cent (equivalent to 131 million full-time jobs) in the first quarter of this year, per cent (140 million full-time jobs) in the second quarter and per cent (137 million full-time jobs) in the third quarter. However, this aggregate picture masks great divergence between countries. Working hours in high- and upper-middle-income countries tended to recover in 2021, while both lower-middle and low-income countries continued to suffer large and enterprises: The disproportionate shock of COVID-19As lower-productivity enterprises and lower-paid workers were disproportionately harmed by the pandemic, global labour productivity (output per working hour) grew in 2020 by more than twice the long-term average.

3 In 2021, global labour productivity growth has slowed down significantly, with negative growth in low- and lower-middle-income countries. As a result, the productivity gap between developing and advanced economies has grown. In 2020, the average worker in a high-income country produced times more output per hour than the average worker in a low-income country. This gap has increased to in 2021, the biggest difference since , unemployment and inactivity: An unequal pictureThe latest global estimates and country-level data confirm the unequal employment impact of the COVID-19 crisis in 2020, as well as the fragile, and often diverging, recovery trends over the first half of 2021.

4 The number of people employed and participating in the labour force has not fully recovered and labour market slack remains significant in many countries. Young people, especially young women, continue to face greater employment deficits, while the situation continues to be lagging in middle-income , vaccination and job recoveryStimulus: Indispensable but developing countries do not have the same optionsWhile fiscal stimulus packages continue to be a key tool to support the recovery, the fiscal stimulus gap in developing countries (particularly low-income countries) remains largely unaddressed. Estimates show that, on average, an increase in fiscal stimulus of 1 per cent of annual GDP would have increased annual working hours by percentage points by the first quarter of 2021 relative to the last quarter of ILO Monitor: COVID-19 and the world of work .

5 Eighth editionVaccination: Faster roll-outs are crucial for recoveryHigher vaccination rates are also associated with a stronger and faster labour market recovery. Estimates indicate that, for every 14 persons fully vaccinated in the second quarter of 2021, one full-time equivalent job was added to the global labour market. This implies that the slow roll-out of vaccination in developing countries has been retarding labour market recovery, increasing the divergence between for the rest of 2021: Weak and uncertainProspects for labour market recovery for the rest of 2021 remain weak and uncertain. Reflecting the stalled recovery in 2021 to date, significant downward adjustments have been made to the projected working hours for 2021, from the per cent ( 100 million FTE jobs) relative to the last quarter of 2019 that was forecast by the ILO in June 2021, to the per cent ( 125 million FTE jobs) that the ILO forecasts today.

6 Vaccination will continue to be a key factor in shaping the eventual labour market outcome for 2021. In a fair vaccination scenario for the fourth quarter of 2021, which assumes an equitable distribution of vaccines globally, low-income and lower-middle-income countries could reduce their working-hour losses in the fourth quarter considerably: hours worked would increase by and percentage points in low-income and lower-middle-income countries, aheadNotwithstanding the resumption of global economic growth, overall recovery in hours worked is now flatlining significantly below pre-pandemic levels, and with a great divergence between advanced and developing countries.

7 In low- and middle-income countries, fiscal constraints and slow vaccination progress are hindering recovery, compounded by additional downside risks including debt distress and global supply chain bottlenecks. Global action, including financial and technical support, provides the key for a human-centred recovery. In this regard the recent, and unprecedented, allocation by the IMF of US$650 billion in special drawing rights offers a major opportunity. To mobilize and facilitate these global efforts, the ILO will support national tripartite dialogues in Member States and convene a major international policy forum with multilateral institutions and other key actors. X Part I.

8 Labour market developments in 2020 21: Increasing disparities1. Return to workplace and vaccinationThe labour market situation in 2021 continues to be impacted by the evolving dynamics of the pandemic. The roll-out of vaccination campaigns has helped some countries combat the virus and open up, but this has been mainly concentrated in advanced economies. In early October, the share of fully vaccinated people globally reached per cent, but with large differences between countries. While high-income countries have the highest percentage of fully vaccinated people at per cent, the proportion is much lower at per cent in lower-middle-income countries and only per cent in low-income countries (figure 1 (a)).

9 This great unevenness in vaccination is also reflected in regional figures (figure 1 (b)). In the Americas, Europe and Central Asia, and the Arab States, more than 40 per cent of the population was fully vaccinated by early October. Vaccination rates have followed a similar trend in Asia and the Pacific ( per cent) but are still lagging behind other regions, though with substantial differences across countries, while in Africa, progress in vaccination has been very slow ( per cent).As vaccination rates have increased, workplace closures (WPC) (figure A1, Statistical annex) are currently on a downward trend. While most workers still live in countries with some form of workplace restrictions, the strictest form of closure (economy-wide required closures for all but essential workplaces) has nearly disappeared (affecting less than 1 per cent of the employed globally in early October 2021, compared to a peak of 41 per cent in April 2020).

10 3 ILO Monitor: COVID-19 and the world of work . Eighth editionHowever, once again, there are considerable differences between regions (for more details see figures A2 and A3 in Statistical annex). Europe and Central Asia has seen a significant decrease in restrictions as vaccinations progressed in the course of 2021. By contrast, restrictions in Asia and the Pacific have become more widespread in recent months, with a large majority of workers residing in countries with some form of current workplace closure measures. At the same time, these measures have become increasingly targeted at specific Vaccine deployment is playing a critical role in economic recovery. Vaccines have been demonstrated to be highly effective in protecting against symptomatic COVID-19 , and critically against hospitalization and death.