Editorial | World hopes rest on speedy recovery in US labour market
- With the White House warning unemployment in the largest economy on Earth may exceed 20 per cent, it is time for everyone to be worried
The speed and depth of the collapse of the labour market in the United States due to the coronavirus pandemic should concern everyone, not just Americans. The White House now warns the unemployment rate could reach past 20 per cent, putting it within range of the rates during the depths of the Great Depression.
In February, which seems an eternity away, the unemployment rate was 3.5 per cent, a half-century low. The world’s largest economy is choked by lockdowns while China is not picking up the slack.
The International Monetary Fund has warned that its upcoming forecast for the economic outlook will be worse than its mid-April prediction of a 3 per cent contraction in global output.
The staggering job losses in the US are an anomaly among developed economies of the Organisation for Economic Cooperation and Development (OECD). Despite Washington’s massive US$3 trillion-plus support and stimulus package, it is letting businesses lay off staff and is instead improving unemployment benefits to shield the newly jobless from economic hardships.
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In most other OECD countries, governments have moved to protect jobs by offering to subsidise the wages of workers so long as bosses keep them on. In this respect, Hong Kong has been much closer to other OECD countries in that the government has earmarked HK$80 billion to help workers under the Employment Support Scheme and another HK$57.5 billion to cover ailing firms.
