Pandemic Worsens Inequality as Vulnerable Workers Bear Brunt

(Bloomberg) --

Governments policies must take into account the skewed impact of the coronavirus on workers on irregular work contracts, according to the OECD, which also warned that unemployment will rise further if there’s a second wave of outbreaks.

In a report published Tuesday, it said the fallout has been particularly severe on low-income earners, women, migrants and young people. That issue has also been raised in recent reports by the International Labour Organisation, which has called for better social protection policies.

While governments correctly responded to the pandemic by trying to keep people and businesses afloat, policies now need to balance income security and incentivizing work as economies reopen, the OECD said.

“The most vulnerable are being hurt the most, and that is the women, that is the youth, that’s the children, the elderly but also the low skilled -- and the low-skilled are the ones that are threatened with being left behind,” OECD Secretary General Angel Gurria told Bloomberg’s Guy Johnson and Alix Steel in an interview. “The focus, the policy has to be there to protect them.”

OECD data show that part-time employment has increased across industrialized countries over the past two decades, while job instability, particularly for the least educated, has worsened. Part-time workers tend to receive lower hourly wages than their full-time counterparts, and people on non-standard job contracts receive fewer benefits.

“In times of crisis, ‘normality’ sounds very appealing,” Gurria said. “However, our normal was not good enough for the many people with no or precarious jobs, bad working conditions, income insecurity, and limits on their ambitions.”

For the post-confinement era, the OECD recommends a variety of instruments, including encouraging people to shift among sectors via training and modifying furlough programs to get people back to work.

The crisis has also opened the door to calls for complete overhauls of how economies function, with the notion of paying people a universal basic income -- government payouts to citizens irrespective of their wealth or employment status. London Mayor Sadiq Khan has backed such an idea.

Yet the OECD warned such a plan would be a “highly risky strategy” that’s very expensive and could even backfire.

“A fiscally realistic UBI would be too low to provide reliable poverty alleviation on its own,” it also said.

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