COVID-19 and the World of Work

ILO forecasts Western Balkan economies will lose 11.6 per cent hours worked in Q2 due to pandemic

ILO global estimates show that the COVID-19 crisis is causing an unprecedented reduction in economic activity and working time. The ILO estimates for quarter 2 indicate that the Western Balkans will lose 11.6 per cent of hours worked due to the Covid-19 pandemic. This is equivalent to 810,000 employment losses in terms of full time posts (assuming 40 hours per week).

Press release | 21 May 2020

© AFP/Andrej Isakovic

The short-term impacts in the 6 economies of the Western Balkans are likely to be extremely severe as many economic activities had to stop completely, while others operate at reduced capacity. Importantly, though, not all workers that stopped working in the early days of the COVID-19 crisis are unemployed. Some employers opted to continue paying their workers through savings, hoping that the worse of the crisis would be over soon. In other cases, governments have put in place employment retention measures, whereby they subside a portion of the wage bill so that employers maintain the employment relationship with their workers also during the lockdown. Nevertheless, many workers will face a loss of income and deeper poverty even if partial substitute activities can be found during the lockdown (e.g. returning to agriculture in rural areas or engaging in some casual platform work).

Unemployment is not the best indicator to measure the immediate labour market impacts of the crisis. Using the number of registrations at the Employment Agency or the claims of unemployment benefits to gauge the employment impacts in the short run could also be misleading. Registration is now a purely administrative step, including for seasonal workers who could not even start their employment in tourism or agriculture, and hope to have access to some form of support in the future. Many workers who lost their jobs de facto have no access to unemployment benefits or other forms of incomes replacement because they hold atypical employment contracts and/or belong to informal segments of the labour market.  

At the global level, the ILO has continued to monitor the labour market impacts of the COVID-19 crisis based on its “nowcasting” model. This is a data-driven statistical prediction to provide a real-time measure of the state of the labour market, which takes advantage of real-time economic and labour market data. This means that ILO does not explicitly define a scenario of how the crisis unfolds, but let the real-time data implicitly define this scenario. The target variable of the ILO nowcasting model is hours worked, and more precisely the decline in hours worked that can be attributed to the outbreak of the COVID-19 crisis. To estimate this decline, a fixed reference period is set to use as the baseline, the fourth quarter of 2019 – seasonally adjusted. The statistical model produces an estimate of the decline in hours worked during the first and second quarters of 2020 compared to the fixed baseline.

These data represent the earliest attempt at quantification of labour market impacts of COVID-19 in the region. The ILO is working on a country-specific nowcast as more data become available in the coming weeks.