Impact of vaccine inequity on the labour market

Countries with high vaccination rates are gradually reopening while countries where vaccination rates are low are keeping lockdown measures in place, while struggling to reopen their economies. This is particularly problematic for informal workers for whom extended lockdowns equate to job losses

Global employment recovery, projected to improve in the second half of 2021, will be uneven due to inequities in vaccine access, fiscal support and social protection[1]. Data on working hours lost due to COVID-19 shows that the equivalent of 255 million jobs were lost during the pandemic, which is five times higher than the job loss during the 2008 financial crisis[2]. However, impacts vary significantly across countries. High-income countries have been more successful at limiting the loss of working hours, as a larger share of jobs in these countries can be done remotely and their economies are opening up through wide-spread access to vaccines. Additional analyses beyond the loss of working hours, which mainly focus on the formal employment sector, are needed to fully understand labour market impacts of COVID-19. 

Data from the Dashboard reveals a strong relationship between vaccination rates and lockdowns. Since a majority of informal jobs are not flexible to remote work, extended lockdowns equate to job losses for informal workers. In 2020, the earnings of approximately 1.6 billion informal workers declined by 60 per cent due to COVID-19 related lockdown measures. The main reason for the high vulnerability of informal workers to lockdowns is because the sectors in which they work have been the hardest-hit like wholesale and retail trade, manufacturing (non-agriculture), and hospitality services[3]

Comparison of the stringency index (a composite index that categorizes country-level lockdown measures) and vaccination rates, shows that countries with high vaccination rates are gradually reopening while countries where vaccination rates are low are keeping lockdown measures in place while struggling to reopen their economies. So far, 2021 has seen a significant increase in the number of days of complete lockdown in countries with a large informal sector, including India, Indonesia and Ghana, where national vaccination rates are too low to allow reopening of economies. This is particularly problematic for informal workers who depend on daily wages.

Since many countries with large informal economic sectors are unable to achieve significant increases in national vaccination rates that could lead to wide-ranging resumption of economic activities, these countries should create clear vaccine prioritization plans that target informal workers, along with other groups of people who are most at risk of the virus, including like women and girls. However, a cursory review of the vaccination prioritization plans for a few countries with large informal sectors reveals a lack of a comprehensive vaccination plan for these populations. While some countries include market workers, transport workers, hospitality sector workers, and women and girls as part of the prioritization of vulnerable populations, these groups are often found in the lower end of the prioritization scheme. Low rates of social protection and fiscal support also compound pre-existing vulnerabilities associated with the informal sector. Vaccination efforts that do not prioritize informal workers increase the risk of new waves of infections and delay recovery efforts.  Informal workers in these countries could therefore face more dire socio-economic circumstances in 2021.

Given that pandemics in the last few decades have been followed by increases in inequality[4], vaccine inequity has the potential to further deepen the socio-economic divide.

 

 

[1] COVID-19: ILO Monitor – 7th edition

[2] IMF, World Economic Outlook, April 2021

[3] IMF, 2020, Impact of lockdown measures on the informal economy  

[4]  Furceri, D., Loungani, P., Ostry, J. D., & Pizzuto, P. (2020). Will Covid-19 affect inequality? Evidence from past pandemics. Covid Economics, 12(1), 138-157.