Large queues formed outside Australian unemployment benefit offices as the prime minister warned the coronavirus pandemic would cause an economic crisis akin to the Great Depression.
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Job losses across Asia Pacific could double due to the coronavirus pandemic — and some of these jobs may not come back for a while, S&P Global warned.
“Unemployment rates across Asia-Pacific could rise by well over 3 percentage points, twice as large as the average recession,” said S&P’s Asia Pacific Chief Economist Shaun Roache in a report Monday.
The services industries are among the first to feel the impact of those lockdowns, but that very sector is also what’s driving job creation in countries like Japan and South Korea, the ratings giant said.
“Jobs are at the core of the current economic crisis,” said Roache. “Measures designed to limit viral spread are striking at the heart of the engine of job creation across Asia-Pacific — the service sector.”
“Service sector activities often require human-to-human contact while mitigation policies aim at social distancing. The clash of these two is obvious,” he wrote.
Based on projected reduced growth of about 7.5 percentage points, S&P laid out the impact on job losses among major countries in the region.
These are the estimated increase in unemployment rates at their peak, about four quarters after the growth decline:
“Given the way the services sector is being hit by social-distancing measures, it’s plausible that, for every percentage point fall in growth in Asia-Pacific, the rise in unemployment could be larger now than in previous cycles,” the report said.
Among nine major economies in Asia-Pacific, the largest increases in unemployment rates on average were seen in Australia, Hong Kong and New Zealand, according to S&P, which analyzed official data from those countries going back to 1980.
“In every economy except Singapore, (job) busts happen much more quickly than (job) recoveries,” it said. “In fact, busts tend to last about six to eight quarters while recoveries take about eight to 10 quarters (or two to three years). This gap is especially high in Australia, Hong Kong, and (South) Korea.”
More than 50% work in services
The services sector has become the “most important” employer across the region, S&P’s Roache said. Out of every 100 workers in Asia-Pacific, 55 on average work in services, he said. In contrast, just 14 of the 100 work in the industrial sector.
Across the region — especially in China and other emerging markets — agricultural jobs have “disappeared.” But, rather than moving mostly to factories, those workers have instead gone to hotels, restaurants and malls, the report said.
The hospitality sector’s share of China’s total employment growth has been five times larger than that of factories over the past 20 years, it added.