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CLOCKED OUT

China is driving a slump in hours worked globally

A worker in protective suit in Shanghai in May 2022.
Reuters/Aly Song
Locked down, clocked out.
  • Mary Hui
By Mary Hui

Reporter

Published

Multiple overlapping crises are buffeting the world: the Russia-Ukraine war has driven up food and energy prices. China has imposed widespread pandemic lockdowns. Supply chains are jammed and shortages of all kinds abound. All that is pushing up global inflation.

Now add to the mix a global labor market whose recovery has just gone into reverse.

A new report (pdf) by the International Labor Organization (ILO) finds that the total global hours worked in the first quarter of 2022 is still 3.8% below the pre-pandemic benchmark, erasing gains made in 2021’s fourth quarter.

That’s equivalent to a deficit of 112 million jobs, which the United Nations agency called a “significant setback in the recovery process.” Worse, the ILO predicts global hours worked will slip further in the second quarter.

China is driving the slump

According to the ILO, 86% of the decline in global hours worked in the first quarter is caused by China—specifically, its recent pandemic lockdowns. As of earlier this month, some 330 million people across dozens of cities were affected by lockdowns, accounting for nearly a third of the nation’s GDP, according to estimates by Japanese financial group Nomura.

China’s slump in working hours and overall economic activity has ripple effects on other economies. Factories shut down or running below capacity means more supply chain backlogs, which in turn adds to inflationary pressures.

Meanwhile, there are few signs that Beijing will diverge from its zero covid approach anytime soon. That means we can expect continued disruptions to economic activity from pandemic lockdowns, even if officials manage to be better calibrate restrictions.

One silver lining is that China’s stringent pandemic rules means the country will likely avoid mass outbreaks with covid cases in the millions. Not only will that prevent huge death tolls, it could avoid widespread complications of long covid—which, as an economist at the Bank of England recently pointed out, can significantly shrink a country’s workforce.

More labor disruptions are coming

Meanwhile, Russia’s war in Ukraine has also disrupted labor markets. Working hours have collapsed in Ukraine, and the ILO predicting losses in the second quarter to “deteriorate significantly.” That’s not to mention an estimated 5 million jobs already lost in Ukraine.

Then there’s the long-term effects of covid, and how those will affect the labor force. Consider that even mild cases of covid can lead to long-term symptoms and complications, some of them debilitating. And research shows that severe cases can cause long-term cognitive impairment equivalent to losing 10 IQ points. On a societal level, this amounts both a smaller workforce and lower productivity overall.

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