The coronavirus has dealt a savage blow to the world
economy, idling workers and bankrupting businesses around the globe.
But months into the crisis, a clear divide between survivors
and casualties is emerging. Countries, workers and industries that rely on
making stuff—from computers to furniture to toys—are getting by, or even
thriving, amid the economic maelstrom.
Meanwhile, those who provide the sort of face-to-face
services that people avoid out of fear of infection—traveling, eating out,
going to the movies and some child care—are struggling. Services that don’t
require physical proximity—such as many financial services, software and
telecommunications—have been less badly hit, as have construction and farming.
This divide between manufacturing and services means the
pain has fallen especially heavily on female and immigrant workers and on
economies with large informal sectors or with heavy exposure to tourism,
entertainment and travel.
That divide is especially alarming given this autumn’s spike
in infections in much of the West, suggesting workers, companies and countries
reliant on services face a long, painful recovery that may only arrive when a
Covid-19 vaccine comes into widespread use.
Historic divide
According to growth forecasts by the International Monetary
Fund, the world’s economies are diverging this year more sharply than ever
before. Much of the difference seems to come down to the economic structure
countries had going into the crisis, rather than their handling of the virus.
Manufacturing and export-heavy economies in Asia have
performed well, while those with large tourism sectors have suffered, even
where the pandemic had been brought under control.
For instance, Thailand has reported just a handful of local
cases in the past three months, but relies heavily on tourism and has suffered.
Taiwan, on the other hand, is a major exporter of computer components and
electrical machinery.
Haves and Have Nots
Factories have largely recovered from the nationwide
lockdowns some countries imposed in the spring, while trade with China—which
produces key inputs for many manufacturers—has recovered.
But face-to-face services are still in the doldrums. For instance,
in the U.K., industrial production was just 6% lower in August than in
February, but services output was down 9.6%.
In September, global car production marked its biggest jump
in production in a decade, as consumers avoided public transport…
...but travel and entertainment remain depressed.
That is hurting jobs...
...as well as the balance of payments for some countries
highly dependent on tourism.
Women’s Work
In a reversal of what happened in the wake of the global
financial crisis, women have suffered larger job losses this time, in part
because they are heavily represented in face-to-face services jobs. For
economists, this is one of the big changes of the current recession, with men
having suffered more job losses than women in each of the six downturns
recorded in the U.S. since 1970.
The fall in employment in the three months through June from
the same period a year earlier was larger for women in almost all of the
countries surveyed by the International Labor Organization.
In the U.S., employment in leisure and hospitality recorded
the largest fall in September since early this year, a sign that the new spike
in infections is still hurting female employment.
Reverse Migration
Immigrants have been especially hard hit by the closure of
restaurants, bars and other businesses that involve face-to-face contact.
Migrants account for a larger share of employment in the accommodation and
food-services industries than they do in the workforce as a whole, especially
in Europe. Without those jobs, many were forced to return to their home
countries.
In the Shadows
In many parts of the world, but especially the poorest
countries, large shares of the workforce make their living outside of formal
employment. Over two billion people work in the informal economy globally,
according to the International Labor Organization, including over 80% of
workers in populous countries like India, Indonesia and Nigeria.
Jobs in the informal sector are often in services, from
cleaning houses to washing dishes in restaurants. Many of these jobs have
fallen victim to the downturn.
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