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How to rebuild and reimagine jobs amid the coronavirus crisis

McKinsey 15 Apr 2020 12:00

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COVID-19 is the most serious health crisis the world has experienced in a century—and it could also be one of the biggest destroyers of jobs in human history. That matters greatly: when people are stripped of their work, they suffer losses not just of income but also of dignity, meaning, and hope.

The International Labour Organization has forecast that the pandemic could reduce global working hours by nearly 7 percent in the second quarter of 2020—equivalent to 195 million full-time jobs. 1 1. “COVID-19: impact could cause equivalent of 195 million job losses, says ILO chief,” United Nations, April 8, 2020, news.un.org. McKinsey’s analysis suggests that, in regions as diverse as Africa, Europe, and the United States, up to a third of the workforce is vulnerable to reduced income, furloughs, or layoffs as a result of the crisis. Many millions of jobs could be lost permanently. That, in turn, would greatly dampen consumer spending, with knock-on effects across economies.

Creating a granular view of who needs help to keep their job—or find new work

A heat map can be created at the level of an entire country, a region, a city, or a suburb. The result would provide governments and their private-sector partners with an initial list of the businesses and services in which jobs could be lost—and are therefore in need of interventions to safeguard employment—as well as those in which jobs are being created. In Australia, for example, we have developed heat maps at both the national and state levels, and it is possible to refine that further to individual postcode (Exhibit 1). Their value lies in tracking where opportunities for redeployment may exist. The heat maps would need to be updated regularly to capture the dynamic nature of the labor market, given the evolution of the pandemic and governments’ responses to it.

Which demographics are most vulnerable?

In Europe, our analysis finds that education has a significant impact on the level of short-term job risk, potentially exacerbating existing social cleavages. Four-fifths of the total jobs at risk in Europe are positions that do not require a tertiary degree, while employees without a tertiary degree are almost twice as likely to have their job at risk than are employees with a university education. Our research in Europe also finds that the jobs of young workers—those aged 24 and younger—are at significantly higher risk in the crisis. 4 4. “COVID-19: impact could cause equivalent of 195 million job losses, says ILO chief,” United Nations, April 8, 2020, news.un.org.

This is an even greater consideration in developing economies. In Africa, for example, SMEs account for 80 percent of employment, compared with 50 percent in the European Union and 60 percent in the United States. Compounding this, many small businesses in emerging markets operate in the informal sector, making it critical that economic-revitalization efforts extend to informal parts of the economy. 7 7. Kartik Jayaram, Acha Leke, Amandla Ooko-Ombaka, and Ying Sunny Sun, “Tackling COVID-19 in Africa,” April 2020.

Restarting vulnerable small businesses: The stalled job engine


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