The coronavirus outbreak has contributed to a massive fall in the income of individuals worldwide. Losses are both economic and financial. On the economic side, many businesses are facing tough budget conditions which leaves more people unemployed, hence cutting income from salaries. On the financial side, markets are unstable which risks lowering the value of people's savings and pensions.
The virus has so far resulted in millions of people losing their job and thereby their main source of income. The magnitude of rising unemployment varies widely between countries, societal groups and industries. According to the UN’s International Labor Organization, the crisis will by the middle of 2020 have costed an equivalent of 305 million full-time jobs and 1.6 billion informal workers are likely to suffer “massive damage” to their livelihoods. The most affected working sectors include tourism and travel-related industries, hotels, restaurants, financial markets, transportation as well as the production sectors of automobiles, food & beverage, machinery, electrical and electronics, aviation, retail and e-commerce and healthcare . The main causes of the economic downturn are lockdowns of businesses and individuals to contain virus spread, resulting in the interruption of supply chains and falling demand from consumers. Furthermore, the income and economic security of individuals is also highly affected by the uncertainty in the financial sector and the downturn in the stock market. Investments in fragile sectors are shrinking, and banks will have a higher share of “bad loans” since many small and medium-sized businesses are going bankrupted and therefore cannot pay back their debts. Moreover, the large turns in the stock markets affect individuals’ value of pensions or individual savings accounts.
The impact of the worsened economic conditions on individual livelihoods are multidimensional and depends at large on initial economic conditions and what beneficiary group the individual belongs to. However, common effects from unemployment or loss of income are a greater risk of mental health and physical health problems as well as direct and indirect security problems.
People with informal employment
People working in the informal economy, often restaurant or service workers but also many self-employed entrepreneurs, lacks access to standardized contracts ensuring job security or social protection. This leaves them particularly vulnerable in case of unemployment as they are more exposed to permanently losing their income. In modern economies, a large share of informal employees is migrant workers or people that are highly dependent on their monthly income. The initial economic conditions of this group as well as the specific sectors they work in not only threatens their income sources but also their security.
Students and young workers
More than one out of six young people have lost their jobs or paused their employment since the offset of the Covid-19 crisis. Many part-time employees are students or younger workers. Hence, these groups are often the first ones that have to leave in case the workplace has to let people go. This implies both a loss of experience as well as a lowered income which in many cases corresponds to a relatively large share of the person's total income.
Women are over-represented in the rising unemployment numbers. The sectors that are hardest hit by the crisis are sectors where a majority of the workers are female.