Why The Labour Market Needs Fixing – IMF Issues Warning

To avoid further harm to the economy, the International Monetary Fund has cautioned Nigeria and other emerging economies to quickly fix their weak labour markets and severe schooling disruptions.

According to the Washington based lender’s latest research, titled ‘Healing the pandemic’s economic wounds demands fast action,’ pandemic-induced losses for both economic output and employment would be severe in coming years, as discussed in its April World Economic Outlook.

Emerging market economies, according to the research, are more likely to suffer losses because they have less access to vaccines and smaller pandemic support packages.

The commencement of the war in Ukraine was adding to the challenges for many economies, it was stated.

The report added that workers who lost jobs during a recession often suffered long-term consequences.

They may have difficulty finding new jobs during the recovery and may lose some skills as a result of protracted unemployment, according to the report, which noted that such losses damaged the affected individuals and reduced total economic output.

The report read in part: “Our new analytical work finds that, among the key causes of scarring from the pandemic are the prospective weak labour market recoveries in emerging market economies and the severe disruptions to schooling over the past two years across both advanced and emerging economies. Policymakers must act promptly to repair the damage from the crisis and prevent decades of diminished economic output from lost human capital”

“In addition to the challenges in the labour market and from schooling disruptions, there are other channels for scarring as well. For example, the increase in corporate debt and vulnerabilities in the industries hit hardest by the pandemic could also contribute to scarring by weighing on investment and productivity for years to come, according to new research presented in the IMF’s April World Economic Outlook”