Multiple crises threaten recovery
While the impact of COVID-19 has waned in most countries, multiple and overlapping economic and political crises are threatening labour market recovery around the world. These crises are likely to further increase labour market inequalities due to the disproportionate impact on certain groups of workers and firms, while contributing to a growing divergence between developed and developing economies. The latter had already been recovering more slowly from the COVID-19 pandemic, and are now facing less policy space to protect hard-hit workers and enterprises during the most recent crises.
Recovery in hours worked remains uneven and is now threatened by slowdown
The encouraging recovery in hours worked seen at the beginning of 2022 has not continued, although there continue to be significant differences between regions and income groups. Estimates indicate that in the third quarter of 2022, hours worked were 1.5 per cent below the level of the fourth quarter of 2019 (the pre-crisis benchmark), equivalent to a deficit of 40 million full-time jobs. Also, progress in narrowing the gender gap in hours worked is at risk because of the slowdown in recovery.
Divergence in employment persists
In the first half of 2022, employment-to-population ratios had returned to or exceeded the pre-crisis level in the majority of advanced economies, while in most middle-income countries with available data, employment deficits persisted relative to the pre-crisis situation. Available data shows that high-skilled occupations (managers, professionals, and technicians and associate professionals) had experienced a stronger recovery by 2022 Q2 compared with low- and medium-skilled occupations, including services and sales workers, which remain below the level of the same quarter in 2019.
Informal job growth outpacing formal work
Concentrated in developing countries, informal job growth in 2021 fully reversed the losses experienced in 2020, whereas formal employment did not. For 2022, informal jobs are estimated to be growing at the same pace as formal employment, jeopardizing the slow but consistent trend towards formalization observed over the previous 15 years.
Labour market prospects extremely uncertain
The outlook for the labour market is currently highly uncertain, with growing downside risks, including the impacts of high inflation, tightening monetary policy, increasing debt burdens and declining consumer confidence. While it normally takes time for an economic slowdown or a recession to result in job destruction and unemployment, available data suggests that a sharp labour market slowdown is already underway. On current trends, global employment growth will deteriorate significantly in the fourth quarter of 2022.
