The writer is a senior fellow at Harvard Kennedy School
The coronavirus crisis is a tragedy in three acts. Act one was the unprecedented economic contraction as the world shut down from March into May. Act two, the rapid rebound as countries began to reopen from late May through July. Now we are in act three, a long, hard slog to get the world’s economies back to where they were when the year began.
Gains from the rebound have clearly slowed. After adding 4.8m jobs in June, American employers brought fewer workers back in every subsequent month. Citing tax data, the UK’s Office for National Statistics says the number of employees on company payrolls was about 695,000 fewer in August than March, and 36,000 lower than in July. Eurozone unemployment increased in August as the number of people out of work rose by 251,000 to 13.2m.
The International Labour Organization estimates the world will lose working hours equivalent to 245m full-time jobs in the final quarter of this year. Many small businesses closed during the shutdown; many more have found after reopening that they are no longer viable. Even multinational corporations, including Disney, Royal Dutch Shell, Continental, Allstate and Raytheon, are announcing staff cuts.
Few sectors are suffering more than air travel. The International Air Transport Association, which represents 290 carriers globally, says it doesn’t see passenger traffic recovering until at least 2024. Global airlines, including Lufthansa and Cathay Pacific, have cut more than 400,000 jobs already. American Airlines and United Airlines began furloughing tens of thousands more as government aid expired this month.
As companies restructure or finally go under, temporary lay-offs have fallen and permanent unemployment has risen. Nearly 80 per cent of US job losses were classified as temporary in April, and 8.5 per cent as permanent.