How Did The Pandemic Impact Universal Pocket?
The catastrophe of Covid-19 impacted human life on a large scale, among all the influenced areas, economic degradation was the stronger one.
The current slowdown in demand and escalating inflation in the world market are a few repercussions that the world is facing due to the advent of the pandemic.
According to the World Bank’s global economic prospect report, global growth is expected to decelerate markedly from 4.1 per cent in 2022 and 3.2 per cent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
Lengthy lockdown months, excess expenditure on health infrastructure and most importantly loss of human resources became the major cause for job providers around the world to maintain cost efficiency by laying off employees and cutting out salaries that eventually affect the earnings.
Lesser earnings further proceed to the lesser demand in the market and eventually create an economic condition of recession where the purchasing power of people does not allow them to consume the current supply rate.
As the Head of the Organisation of Economic Co-operation and Development (OECD), Mathias Cormann said, "We are not predicting a recession, but we are certainly projecting a period of pronounced weakness.”
The fundamental cause behind the recessive economical situation is decreasing purchasing power of people around the world.
International Labour Organisation (ILO) is one of the United Nations agencies that ensure sustained labour law standards across the different world countries.
Recently, ILO released a report titled “Global Wage Report 2022-2023: The Impact of inflation and Covid-19 on wages and purchasing power” that highlighted the movement in the wage graph after the Coronavirus.
The report noticed that global wages were reduced in 2022 for the first time since 2008 it also added that monthly wages have declined by 0.9 per cent in real terms in the first half of 2022. This is the first negative growth of real global wages in the 21st century.
The United States, the United Kingdom, Spain, South Korea, Bulgaria and Spain are some of the countries that witnessed a fall in the minimum wages. While Italy, Japan, Mexico and the UK facing a decrease in overall wages in real terms compared to 2008
The report mentioned the Russia-Ukraine war and global energy crisis as the main cause behind the decline in monthly wages in numerous countries while inflation and global economic slowdown are the secondary determinants behind the cut in wages.
Surprisingly, despite of decline in wages, the global wage report of ILO records the widened productivity. As per the report, 2022 is the year that witnessed the biggest gap between real labour productivity and real wage growth in high-income countries.
Apart from wage trends in the context of the Coronavirus crisis and rising price inflation, the global wage report also discussed wage inequality and the gender pay gap in the context of the Covid-19 crisis and rising price inflation and policy options and responses to the cost-of-living crisis.
The report has also demonstrated how inflation rates are shifting the purchasing power of minimum wages. Further, the report also added that between 75 million and 95 million people were pushed into extreme poverty during the Coronavirus pandemic.
Figuring out the issue, the global wage report also emphasises the cost of living crisis as one of the issues impacting the decline in wages and suggests required measures to control it, the report advised ‘‘Cuts to VAT can mitigate the burden of inflation among low-income households while further helping to reduce inflation.’’
