The Covid Inequality Ratchet: how the pandemic has hit the lives of young, women, minority and poor workers the hardest.

July 8, 2020

     By Duncan Green     

On the occasion of the “ILO Global Summit on COVID-19 and the World of Work” Oxfam’s Filippo Artuso, Iñigo Macías-Aymar, and Franziska Mager looked into what we know about the unequal impact of COVID-19 on workers, and how to rebuild fairer societies.

The coronavirus pandemic and global lockdown measures have shone a light on pre-existing inequalities in labour markets. What do we know so far?

We looked at the data for high and lower/middle income countries. This is what we found.

Findings from high-income countries

Young, women, ethnic minority, low-paid, and part time workers are the most affected by hours reduction

In early April, while more than 3.2 billion people (or almost half of the world population) was living in a partial or total lockdown, the ILO estimated that 2.7 billion workers were being affected by these measures. They represent around 81 per cent of the world’s workforce. In the first quarter of 2020, the estimated loss in working hours was equivalent to 130 million full-time jobs.

Preliminary evidence from high-income countries shows that not all are affected equally. Instead, low-paid, part time, young, women, and ethnic minority workers suffer the most.

The ILO estimates that more than four in ten young people employed globally (178 million) were working in hard-hit sectors when the crisis began. Almost 77 per cent of young workers were in informal jobs, compared with around 60 per cent of adult workers (aged 25 and above). Young workers risk being scarred by the effects of the lockdown for much longer after its end.

In the UK, employees aged under 25 were about two and a half times as likely to work in a sector that was shut down as other employees. The same study reveals that low earners were seven times as likely as high earners and women were one third more likely to work in shutdown sectors.

The share of workers in shutdown sectors was also higher in lower income deciles (figure 4). Data from the US reveal that low-wage and part-time workers, women, and minorities were the most likely to hold vulnerable jobs. And with the economic earthquake triggered by the pandemic, we can only assume the same people will suffer most in the coming months, when people in UK and US expect to earn, respectively, 36 per cent and 37 per cent  less than usual.

Source: IFS, 6th April 2020 (data from UK)
Source: McKinsey & Company, 29th April 2020 (data from US)

The same groups have less chances to work from home

With the exception of so called ‘key workers’, during the stricter phases of lockdown, the ability to continue working – and to be paid – has become extremely dependent on being able to work from home. Working from home also means being less exposed to infection.

A study from SciencePo found that the ability to work from home in many high-income countries,  is correlated with:

  1. Higher education
  2. Higher Income
  3. Being a “white collar” worker
  4. Being older than 35
  5. Being male

Unfortunately, the study does not present data disaggregated for minority/ BAME workers.

Other studies confirm the findings. In the US, only 9.2 per cent of workers in the bottom 25 income percentile are able to work from home, compared to 61.5 per cent in the top 25. Similar data are confirmed from a survey from Madrid, Spain – the graphs clearly show how lower pay means lower probability of being able to work virtually.

Source: COVID Inequality Project (data from US, UK, and Germany)

Source: Dirección General de Innovación y Estrategia Social (data from Madrid. P.13, our translation)

Low- and middle-income countries: vulnerable and precarious workers are (also) the most affected

Although data from middle- and low-income countries are scarcer, we do know that some particular categories of workers have been particularly affected by the lockdown measures. They are mostly workers on lower incomes and are suffering because of a reduction in working hours.

Covid-19 hits informal workers the hardest

Globally, around 2 billion people work in the informal economy. This is 61 per cent of global employment, with rates of informality ranging from 85.8 per cent in Africa, to around 68 per cent in Asia, the Pacific, and Arab states, down to 25 per cent in Europe. Informal workers, usually lack basic social protection and are often hidden in employment statistics. ILO estimates that 1.6 billion informal workers will be significantly impacted by lockdown measures. In the first month of the crisis they have lost 60 per cent of their earnings. According to FAO, “specific groups of workers, including women, youth, children, indigenous people, and migrant workers, who are overrepresented in the informal economy, will experience further exacerbation of their vulnerability”. For a great majority of informal workers, work is a hand to mouth struggle for survival – not working means not eating.

What’s worse is that the pandemic will probably increase informality. In Latin America, for example, the crisis could bring informality rates back to the levels of the end of the 20th century – an increase to 62 per cent from pre-crisis levels of 54 per cent.

The impact on migrant workers

Migrant workers – and particularly seasonal workers – are being affected by travel restrictions. In Qatar, for example, low-wage migrant workers are desperate because of the lockdown, and some are forced to beg. As a consequence, global remittances might see the sharpest decline in recent history – by 19.7 per cent in 2020, according to predictions of the World Bank. The reduction in working hours, compounded by the decrease in remittances, will severely harm livelihoods in low- and middle-income countries. The WFP estimates that, unless swift action is taken, 130 million additional people could face food insecurity by the end of 2020.

The hidden data: impact of Covid-19 on Invisible workers

When analysing the impact of Covid on work, it is rare to stumble across research that portrays the increase in unpaid care resulting from the closure of many services (particularly schools). But the research that exists (by Oxfam and others) is unequivocal; unpaid work is disproportionately carried out by women and, also during the lockdown, women are picking up more of the increased burden of on childcare and home schooling than men in UK, US, and Germany. A new study by Oxfam reveals that single mothers, women living in poverty, and ethnic and racial minorities reported the largest increase in unpaid care work.

Source: COVID Inequality Project (data from US, UK, and Germany)

Could Covid-19 be a Fork in the Road?

The virus is revealing the big weaknesses in the social contract on which we have built our societies. It is showing who are the most vulnerable groups in our labour markets, namely young, women, ethnic minorities, low-paid, low-educated, and part time workers. At the same time, the pandemic has revealed the true value of a great number of the jobs done by these vulnerable groups.

Until now, these jobs were considered marginal and rewarded with low wages and precarious working conditions. But we now have the opportunity to re-build our economies based on something better – a revitalised social contract, where no one is left behind. A better and fairer society.

July 8, 2020
Duncan Green