COVID-19: The Effects on the Asian Labour Markets

Initially considered a global health catastrophe, now, COVID-19, or coronavirus, as Guy Ryder, the Director-General of the International Labour Organisation — ILO, assesses, “is also a major labour market and economic crisis that is having a huge impact on people.”

Asia is no exception, and despite the quick and effective response by some governments, the labour markets are being hit hard at varying degrees in the region. In fact, it has been predicted that the effects will be worse than those felt by the financial crisis in 2008–09, with millions of people potentially facing unemployment, underemployment and poverty.

The unprecedented effects of COVID-19 are already considerably far-reaching, disrupting tourism and travel, supply chains and labour supply. Its greatest attack on the economy, however, has been the creation of extraordinary uncertainty, which in turn affects trade, investment and output, and subsequently, growth. Such concerns have only become worse by the ever-increasing approach by countries to lock down where necessary.

Health over wealth

Understandably, governments around Asia are determined to combat the effects of coronavirus. To date, Vietnam has been doing an impressive job in containing the virus, with the Prime Minister of the country stating that it “accepts economic loss to protect people’s lives and health”. Having been riding a huge wave of growth, Vietnam is now preparing itself for a significant hit. The nation’s Ministry of Planning and Investment estimated that COVID-19 will reduce Vietnam’s 2020 GDP growth by -1.48% points to 5.32%, lowest since 2013, down from 7.02% GDP growth in 2019. A huge blow for labour markets in the country with similar negative predictions on GDP growth seen throughout the region.

Tourism — the first casualty

With the extensive travel disruptions, it is no surprise that tourism was the first to be hit as a result of the pandemic. Throughout Asia, Thailand is one of the biggest countries affected, with tourist arrivals plunging by more than 44% in February alone, amidst the coronavirus outbreak. Small-scale entrepreneurs, such as flower sellers, traditional dancers, and drivers are reporting their income dropping by half over the past month. While also the lack of work for tour guides in the country has led to 25,000 people out of work. Economically, it’s been predicted to affect every single industry within the country.

Manufacturing — a significant impact

The coronavirus’s negative effects are also severely disrupting this industry across Asia due to the nature of the work, coupled with the government’s responses. Unlike the service industry, for instance, many of these roles require an on-site presence. What adds fuel to the fire is that, broadly, a number of these jobs are relatively low-paid. As an example, the World Bank has estimated that approximately 20 percent of Indonesians are vulnerable to falling into poverty in the face of economic shock from the COVID-19 pandemic. With the workforce of some industries facing quarantine and limits on their movement, people are losing their much-needed livelihoods.

Service Industry — the silver lining?

If one was pushed to find positives for the labour markets from this global dilemma, the service industry might be it. For decades, the industry has led the way in digitally transforming the workplace and with the foundations in place, now the optimal option for many companies has been a sudden mass movement to remote working in this now ‘no-touch’ world. As companies continue to be productive, face-to-face meetings and office time may be a thing of the past, as this lifeline, the digital world, paves the way.

While some of these digital tools may have been used in the past, now they are taking on a new function and significance during this extended period of remote working. For example, maintaining close communication within a team can be the biggest challenge when a company’s workforce is remote, however, instant messaging services can facilitate the necessary seamless communication between individual team members, departments and an entire company. With the functionality to implement different chat channels, employees are able to discuss specifically different areas of work, brainstorm ideas and stay connected to each other throughout the working day.

Furthermore, when written chat messaging is not suitable, and ideally, face-to-face time is desired, video meetings can now fill the void. According to Kentik, a global provider of network analytics, video conferencing traffic in Asia has doubled since the outbreak began. With attendees seeing each other’s expressions and reactions in real-time, this comes as no surprise as video conferencing can replicate the benefits of meeting someone in person. This medium also boasts of screen-sharing capabilities, recording, and being far more internationally accessible, bringing advantages not even available in face-to-face interactions.

Additionally, the ability of keeping a team on track and maintaining projects and workflows while they are working remotely is critical. Luckily for the service industry, technology has also stepped in here to provide support. With project management software, each task can be assigned, with status update options, and project progress tracking, all available at a glance. In fact, it is arguable that the benefits of such programmes will mean that organisations will never return to the era of pre-project management software.

Government Support

In Asia, supporting the labour markets is possible, but certain countries will succeed better than others. Those with a strong significant fiscal capacity, such as China, Japan and Singapore, are able to provide the economic stimulus measures needed. Such measures, for example supporting packages to help firms defray wage costs, can help households and small businesses through this period. Developing countries, however, such as India and the Philippines do not benefit from such resources to lessen the tremendous negative impact on ordinary low-income workers who, without savings, depending on their daily wages for survival.

The Future

In order for the economies of each country in Asia to bounce back, there needs to be an effort that goes beyond nations and continents. Only international collaboration could significantly lower the impact of global unemployment. Such leadership and cooperation were seen in 2008 when the world presented a united front to address the consequences of the global financial crisis. The ILO has stated that if policies are put in place globally, there is hope. From protecting workers, through occupational support, staggered hours and paid sick leave; kicking start the economy, with fiscal and monetary policies, such as cutting interest rates; to supporting employment, through work reduction, compensation arrangements and social assistance; internationally there are options to mediate this crisis.

While international cooperation may take time to pick up its pace, for now, for Asia, as Victoria Kwakwa, Vice President for East Asia and the Pacific at the World Bank, shares, there is good news, ‘the region has strengths it can tap, but countries will have to act fast and at a scale not previously imagined.” Time will tell.

JobHopin Asia.

References

• International Labour Organisation — Almost 25 million jobs could be lost worldwide as a result of COVID-19, says ILO -https://www.ilo.org/hanoi/Informationresources/Publicinformation/Pressreleases/WCMS_738992/lang--en/index.htm
• Michael Kokalari and Huyen Tran — COVID-19’s Economic Impact on Vietnam — https://vinacapital.com/wp-content/uploads/2020/02/COVID-19-Vietnam-Impact-25-FEB-2020.pdf
• Nick Keyes and Marcela Sanchez-Bender — East Asia and Pacific: Countries Must Act Now to Mitigate Economic Shock of COVID-19 https://www.worldbank.org/en/news/press-release/2020/03/30/east-asia-and-pacific-countries-must-act-now-to-mitigate-economic-shock-of-covid-19
• Maria Mexi — The future of work in the post-Covid-19 digital era — https://www.socialeurope.eu/the-future-of-work-in-the-post-covid-19-digital-era
• UN News — Swift policy action, strong leadership can save millions of jobs, ‘avert the worst’ amid COVID-19 pandemic — https://news.un.org/en/story/2020/03/1059672
• KARL WILSON COVID-19 — a ‘labor market crisis’ — http://www.chinadailyasia.com/article/126024
• Khut Sokun — Garment Workers Strike Over Unpaid Wages Amid Virus Pandemic — https://vodenglish.news/garment-workers-strike-over-unpaid-wages-amid-virus-pandemic/
• Charlie Campbell — ‘It Will Be Catastrophic.’ Asia’s Tourism-Dependent Economies Are Being Hit Hard by the Coronavirus
  https://time.com/5783505/thailand-asia-tourism-covid-19-china-coronavirus/
• Kate Taylor — ‘We have to be resilient’: Tourism in Thailand plummets amidst the coronavirus outbreak https://www.businessinsider.com/tourism-in-thailand-plummets-amidst-coronavirus-outbreak-2020-3#uncertainty-about-what-is-actually-happening-is-adding-to-some-peoples-worries-4
• Austin Bodetti — Coronavirus Hits Thailand Hard — https://thediplomat.com/2020/02/coronavirus-hits-thailand-hard/
• Jayant Meno — Assessing the economic impacts of COVID-19 on ASEAN countries — https://www.eastasiaforum.org/2020/03/27/assessing-the-economic-impacts-of-covid-19-on-asean-countries/