COVID-19 causes widespread job losses
Highlighting that the COVID-19 pandemic has triggered widespread job losses across the world, in particular thought the consumer goods and retail sector, The Economist Inelegance Unit says that new employment created by increased e-retail penetration will not help contain the matter.
With finances already weakened by the pandemic and resulting lockdowns, many companies will not be able to take advantage of a recovery that is likely to be fitful, it said.
The consumer goods and retail sector, in particular, is likely to see a wave of bankruptcies and store closures as more business goes online, it said.
“Retail bankruptcies, which accelerated in 2020, will spill over into 2021,” said The Economist Inelegance Unit.
“We believe a fresh wave of companies will close down early next year as the extent of the damage waged by the COVID-19 pandemic and the limitations of the recovery become clearer,” it said.
“The US retail market is likely to see more liquidation, as the prolonged downturn will leave many companies unable to come up with a reorganisation plan or the funds needed for a restructuring,” it said.
“Department stores, which were struggling even before the pandemic, will be particularly vulnerable,” it said.
“Some that emerged from bankruptcy in 2020 now risk turning into zombie companies as consumers cut back on non-essential spending,” it said.
“In countries such as the UK and US, where remote working remains popular, stores, pubs and restaurants in city centres will suffer,” it said.
“Some of the resulting job losses will be replaced by new jobs in warehousing and delivery services as online business expand. For example, according to the US Bureau of Labour Statistics, retail employment fell by one per cent in the US in 2019, while employment in the transportation and warehousing sector rose by 3.5%,” it said.
“However, the coronavirus outbreak will interrupt this trend. While e-retail penetration and jobs will increase, the slow recovery in demand means that rising employment in the sector will not make up for the loss of retail jobs,” it said.
Earlier, the agency pointed out that the global economy would contract 5.2 per cent in 2020 and the expected growth of 4.5 per cent in 2021 was not sufficient to cover the losses of the contraction.