Post COVID employment recovery for female and young workers in South Asia incomplete – WB

Post COVID recovery in labor markets remains incomplete in South Asian countries as they cope with a series of global shocks such as the economic impact of the war in Ukraine, says a recent survey by the World Bank.The survey authored by Valerie Mercer-Blackman, World Bank Senior Economist, South Asia Office of the Chief Economist and Vanessa Olakemi Dovonou

Consultant, Office of the Chief Economist for South Asia, says that the COVID-19 pandemic pushed two of the most disadvantaged groups out of work: women and youth. Women and youth had not returned to the workforce at the same rate as men and their elder peers, when the labor market was still recuperating from pandemic waves.

“Since the recovery of South Asia’s employment market is not complete, policymakers in the region can help reduce the long-term effects of the scarring by ensuring that sectors and firms that have less viability post the COVID-19 pandemic are not protected or ’propped up’. For example, extending credit forbearance to a large state-owned firm shifts public resources away from new firms and startups with huge growth potential. Instead, these resources could be used for regional service centers that provide job-matching infrastructure, training, and IT assistance to workers, thus reducing the cost and friction of switching jobs and transitioning to new sectors,” says the survey report.

“Almost three years after the start of the pandemic, we are just beginning to get a clearer picture of how the labor markets in South Asia have evolved.  Many aspects of employment are ‘structural’ in nature, which means we cannot tell whether changes we observe now are temporary or permanent. In the World Bank’s latest South Asia Economic Focus, we tried to piece together emerging trends based on the limited evidence available, first by looking at changes in employment across sectors, and then by focusing on two demographic groups most vulnerable to job losses: female and youth workers.

The first order at hand is to use the data on recovery by sectors of economic activity to see what may have happened to employment growth and how it varied by sectors. The sectoral variation reflects the severity of lockdowns in each country and is influenced by whether the sector was contact-intensive or amenable to remote work, as well as by the duration and persistence of COVID-19 waves in a locality.

In the case of South Asia, the agriculture sector was less affected, while manufacturing recovered within a few months. However, there was huge heterogeneity in the recovery of the services sector.  The figure below shows the case of India and is reflective of trends in other countries across South Asia. For example, growth in ‘business services’—comprising professional, financial, and real estate services—and in public services soared. In contrast, growth in contact-intensive (“COVID-sensitive”) services, fell sharply. The latter are services in the tourism industry—accommodations, restaurants, recreation, and entertainment—and personal services. People here were likely out of a job for a long time. As of the end of 2022, activity in these sectors was recovering but it is generally nowhere near pre-COVID levels.