Jobs destroyed worldwide as coronavirus sparks recession

The world’s workers are reeling from the initial shock of the coronavirus recession, with job losses and welfare claims around the globe already running into the millions this week.

As the International Labour Organization warns of almost 25 million layoffs if the virus isn’t controlled, the cuts from Austria to the U.S. reflect the deepest peacetime recession since the 1930s as economies are frozen to beat the pandemic.
“We see unemployment rates in the U.S. and Europe getting up well up into the teens,” Peter Hooper, global head of economic research at Deutsche Bank AG, told Bloomberg Television. “Given the pain that we see near-term in the U.S. and Europe, this is unprecedented since the Great Depression, in terms of magnitudes.”

Rising unemployment will intensify pressure on governments and central banks to speed delivery of programs to either compensate workers who are made redundant, or try to persuade employers to hoard staff until the virus fades.Failure would risk an even deeper recession or weak recovery that would require policy makers to consider yet more stimulus on top of that already deployed.

At JPMorgan Chase & Co., economists predict their measure of unemployment in developed markets will jump by 2.7 percentage points by the middle of this year, having started this year around its lowest in four decades. While there will be some healing as economies recover, they still predict elevated unemployment of 4.6% in the U.S. and 8.3% in the euro area by the end of 2021.

The shock to labor markets also marks a stress test for different social models. The U.S.’s more flexible culture means more will lose their jobs than in the euro area or Japan, where there is a greater onus on retaining staff during a shock.