The global pandemic continues to wreak havoc on world economy.
By Larry Basinait
Deploying a global workforce and ensuring access to theÂ best talent is a crucial component of success for all multinationalÂ enterprises. Global labor market intelligence isÂ an invaluable tool for these HR departments and can beÂ used to inform critical decisions around the best countriesÂ and regions in which to grow.
To truly understand unemployment rates, it is necessaryÂ to collect several categories of market information aboutÂ the overall economic environment from which theyÂ derive. For that reason, this global unemployment reportÂ also analyzes measures that include GDP, economicÂ forecasts, and other factors that offer insight into aÂ given countryâs economic circumstances.
COVID-19 has delivered an enormous global shock,Â leading to steep recessions in many countries. TheÂ baseline forecast envisions a 5.2% contraction in globalÂ GDP in 2020âthe deepest global recession in decades,Â according to World Bank Group. Every developedÂ country endured dramatic unemployment rate increases,Â as many businesses laid off or furloughed workers due toÂ lockdowns and weak demand for products and services.
The direct economic impact of the pandemic has beenÂ largely felt within the second quarter as many countriesÂ did not implement lockdown restrictions until the middleÂ or end of March. The decline in work hours in the secondÂ quarter is likely to be the equivalent to losing more thanÂ 300 million full-time jobs globally, according to the IMF.
The Eurozone will likely have a larger hit to its economyÂ in 2020 than the United States, as the Eurozone economyÂ is forecasted to contract by 10.2% versus only 8%Â contraction in the U.S., according to CNBC.
United States and Canada
As the consequences of COVID-19Â continued to deepen across the UnitedÂ States, the economic fallout was at theÂ forefront of business news. In the secondÂ quarter, over 30 million people filed forÂ unemployment, by far the most in a single quarter. InÂ the second quarter of 2020, the Worker ConfidenceÂ Index decreased by 18.8 points from the first quarter ofÂ 2020 to 93.6, marking the third consecutive decline andÂ a precipitous drop of 23.1 points in less than one year.Â In June, the U.S. unemployment rate increased by 6.7Â percentage points from March to 11.1%, according to TheÂ Bureau of Labor Statistics.
The economic impact of the virus affected each stateÂ differently. Massachusetts had the largest increase inÂ unemployment from the end of the first quarter to theÂ end of the second quarter, up 14.5 percentage points toÂ 17.4%, the highest of any state. Overall, there were fiveÂ states with double digit increases in their unemploymentÂ rates on a quarter-over-quarter basis: Massachusetts,Â New Jersey, Hawaii, New York, and Michigan. CaliforniaÂ had the most job losses for the quarter, according to theÂ National Conference of State Legislatures.
However, after a volatile first quarter of 2020 for theÂ stock market, both the S&P 500 and Dow Jones IndustrialÂ Average had their best performance in at least 19 years.Â According to Yahoo Finance, the S&P 500 increasedÂ nearly 20% and the Dow Jones Industrials increasedÂ by over 17% on expectations that the economy wouldÂ reopen from COVID-19 lockdowns and low interest rates.
As in the U.S., the Canadian economy contracted at the sharpest pace on record in the second quarter as mostÂ non-essential businesses shuttered, hammering economicÂ activity. Moreover, retail trade in April had its sharpestÂ contractions on record as consumer spending droppedÂ precipitously. However, in May, the economy pointedÂ to a slight rebound as production levels increased andÂ retail sales surged. Due to the closure of non-essentialÂ businesses, the unemployment rate jumped toÂ 12.3% in June, up 4.5 percentage points from March,Â according to FocusEconomics.
According to FocusEconomics, growth in the East andÂ South Asia region slowed significantly in the secondÂ quarter of 2020 due to limited activityÂ domestically and decreased demand forÂ exports.
China has by far the largest economy inÂ the region with a GDP of $13.4 trillion. In the secondÂ quarter of 2020, the overall economy started to returnÂ to normalcy as many sectors started to reopen. IndustrialÂ production and investment activity both reboundedÂ within the quarter. However, concerns of a second waveÂ of COVID-19 along with the continued rippling effects ofÂ the pandemic weighed on consumer spending, accordingÂ to FocusEconomics.
The Japanese economy, the second largest in the region,Â contracted for the third consecutive quarter due to theÂ national emergency that was declared between April andÂ May for COVID-19. The decline was primarily caused by aÂ fall in industrial production and a contraction in exports,Â finds FocusEconomics. The contraction in the economyÂ let to a modest increase in the unemployment rate, up toÂ 2.8% from 2.5% in the second quarter of 2020.
Europe, the Middle East, and Africa (EMEA)
In the second quarter of 2020, the Eurozone economyÂ contracted the most on record, tumbling 12.1%, reportsÂ Yahoo Finance. As the lockdownsÂ continued in the second quarter in manyÂ European countries, industrial productionÂ and retail sales dropped precipitously.
The United Kingdom has the second largest economy inÂ Europe at $2.8 trillion dollars. In May, the service sectorÂ remained weak as it struggled to recover from the UKÂ economyâs largest reported economic contraction onÂ record in April, according to FocusEconomics. Moreover,Â since March, company payrolls have fallen by 730,000Â people, the biggest drop in the number of workingÂ people in the UK since 2009, reports FocusEconomics.
Despite weak economic data, the unemployment rateÂ improved slightly, down from 4% in the first quarter ofÂ 2020 to 3.9% in the second quarter of 2020.Â Germany has the third largest population in the regionÂ at 82.9 million, but by far the largest GDP ($4 trillionÂ dollars). In the second quarter, the overall economyÂ continued to contract as weakness in the manufacturingÂ sector and weak foreign demand weighed on theÂ economy. Due to the lack of consumer spending, theÂ unemployment rate rose from 3.5% in the first quarterÂ of 2020 to 4.2% in the second quarter of 2020, accordingÂ to FocusEconomics.
In the second quarter of 2020, Latin Americaâs largestÂ economy, Brazil, reported an increase of 1.1 percentageÂ points in its unemployment rate from the first quarterÂ of 2020 to 13.3% in the second quarter of 2020. AsÂ social distancing and lockdown measuresÂ continued into the second quarter, theÂ overall economy contracted again in theÂ second quarter after shrinking at theÂ sharpest pace on record in the first quarter of 2020.Â However, economic data released in May and June suggestÂ that the economy may have bottomed out in April asÂ the manufacturing and retail industries showed signs ofÂ improving, finds FocusEconomics.
Mexico is the second largest country in the region, bothÂ by GDP and population. Even after the economy shrank atÂ the steepest rate in over a decade in the first quarter, manyÂ economic indicators point to a similar trend in the secondÂ quarter. The most recent unemployment data states thatÂ Mexicoâs unemployment rate currently stands at 2.9%,Â according to Reuters.
Click here to access the entire Global Unemployment Report.