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COVID-19 labour effects across the income distribution

27/10/2020

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In the current COVID-19 crisis, it is essential to rapidly provide information to enable policy makers to assess the effects on income distribution in 2020. This article presents the first experimental results linking the labour market impact of COVID-19 on the most affected categories of workers with their income situation.

In general, the risk of facing a loss of income and deeper poverty varies widely across age groups, economic sectors and countries. In labour markets, temporary layoffs (including reduced working hours) concerned millions of workers, while the risk of losing one’s job was more limited, as it was mitigated by short-term support schemes.

 

Share of workers with layoff or reduced working hours in Q2 2020Share of workers that lost their job in Q2 2020

 

The highest risk for a worker to be on temporary layoff was found in the accommodation and food sector. Meanwhile, the risk of losing their job was highest for temporary workers, the young employed (aged 16-24) and low-skilled occupations.

In general, low-income earners including those below the risk of poverty threshold are more likely to be on temporary layoff or to lose their job. The young, low-skilled and the accommodation and food sector workers are often overrepresented in the low-income earner groups in many countries, and hence are at a higher risk.

 

Risk of temporary layoff and losing job, Q2 2020

 

The situation differs from country to country

The social and economic consequences of the pandemic vary across countries. The labour impact is higher in particular in Spain, Italy, Cyprus, Ireland and Greece.

 

Risk of losing job by income from work, Q2 2020

 

Moreover, the COVID-19 labour effects tend to be highly unequal with vulnerable categories of workers most hit. For instance, the probability to lose the job is two to three times larger for low-income earners in Spain, Ireland, Italy or Portugal.

 

For more information, you can read the Statistics Explained article on COVID-19 labour effects across the income distribution.

 

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