Labor_Income_Coronavirus Estimated decline in worldwide labor income in 2020 due to the coronavirus pandemic. Photo: Statista / IBT

While it’s still impossible to predict the economic fallout of the coronavirus pandemic and the measures currently taken to contain it, it’s becoming increasingly clear that the toll on the world economy will be heavy, possibly heavier than what we’ve seen during the financial crisis of 2007-2009.

According to a preliminary assessment by the International Labour Organization (ILO), the COVID-19 pandemic will have a significant effect on labor markets around the world, with unemployment rising by up to 24.7 million people compared to a baseline scenario, depending on how badly global economic activity is impacted. Assuming a 2 percent decline in global GDP for 2020, the ILO expects global unemployment to increase by 5.3 million, while a 4 percent drop in GDP would result in 13 million additional jobless people. The worst-case scenario sees global economic activity disrupted heavily, global GDP dropping by 8 percent and an increase in global unemployment of 24.7 million.

While these numbers are alarming on their own, it’s important to consider the implications of such a steep increase in unemployment around the world. When people lose their job, they lose their primary income, which translates into lower consumption of goods and services and thus exacerbates economic weakness.

According to the ILO’s estimates, workers could lose between $860 billion and $3.4 trillion in labor income this year alone, which will likely prolong the negative effects of current lockdowns and make recovery from this crisis even harder.