COVID-19: The Effects on the Asian Labour Markets

Initially considered to be 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 and 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 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 lockdown where necessary.

Health over wealth

Understandably, governments around Asia are determined to combat the effects of COVID-19. 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%, the lowest since 2013, down from 7.02% GDP growth in 2019. This is a huge blow for labour markets in the country with similar negative predictions on GDP growth seen throughout the Asian region.

Tourism — the first casualty

With extensive travel disruptions, it is no surprise that tourism was the first industry to be hit as a result of the pandemic. Thailand has been one of the biggest countries affected so far, with tourist arrivals plunging by more than 44 percent in February alone, amidst the coronavirus outbreak. Small-scale entrepreneurs, such as flower sellers, traditional dancers, and drivers are reporting that their income has dropped 50 percent over the past month. On top of that sobering trend, the lack of work for tour guides in the country has led to another 25,000 people out of work. Economically, it’s been predicted to affect every single industry within the country.

Manufacturing — a significant impact

COVID-19’s negative effects are also severely disrupting manufacturing 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 many 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 quarantines and limits on their movement, people are losing their much-needed livelihoods.

Service Industry — the silver lining?

The service industry might be a guiding light in the face of huge disruption elsewhere. For decades, the industry has led the way in digitally transforming the workplace. With the proper foundations in place, now the optimal option for many companies has been a sudden mass movement to remote working in this ‘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 digital world lifeline sets the course.

While some of these digital tools may have been used in the past, they are now 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 and seamless communication between individual team members, departments and an entire company. With the functionality to implement different chat channels, employees are able to discuss 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 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, video conferencing can replicate the benefits of meeting someone in person. This medium also features screen-sharing capabilities, recording, and being far more internationally accessible, bringing advantages not available in face-to-face interactions.

Additionally, the ability to keep a team on track and maintain projects and workflows while they are working remotely is critical. Luckily for the service industry, technology has also stepped in to provide support. With project management software, each task can be assigned, with status update options and project progress tracking, all easily available. In fact, there is a chance 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 and significant fiscal capacity, such as China, Japan and Singapore, will be able to provide the economic stimulus measures needed. 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 will not be able to benefit from such resources to lessen the tremendous negative impact on ordinary low-income workers who, without savings, depend on their daily wages for survival.

The Future

In order for the Asian economies to bounce back, there needs to be a coordinated 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 structured policies are put in place globally, there can be hope. There are many options to help mediate this crisis including, workers protection through occupational support, staggered hours and paid sick leave. Other options include powerful fiscal and monetary policies such as cutting interest rates, compensation arrangements and social assistance.

While international cooperation in Asia may take time and patience, 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.” Only time will tell.

JobHopin Team.

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/