International Labour Organization: Global employment impact of COVID-19 crisis and recovery policies
The global economy continues to recover from the COVID-19 pandemic which brought the first global recession in a decade, dramatically decreasing economic growth and GDP. Russia’s invasion of Ukraine in early 2022 continues to threaten global economic recovery.
Cambridge Econometrics’ modelling for the International Labour Organization helped to estimate the employment outcomes of country-based policies to stimulate the economy, notably a green and climate friendly one.
The impact that the recovery policies had on the labour market were assessed using Cambridge Econometrics’ macroeconomic E3ME model and policy data from the Global Recovery Observatory (GRO) database.
The policies were analysed simultaneously to understand the distinct impacts each policy (green and not green) had on employment.
- Between 2022 and 2024 investment stimulus policies, such as large scale infrastructure projects are the main drivers of employment change, increasing global employment by 0.4%.
- From 2025 onwards, carbon pricing and VAT changes become the main drivers of employment change due to higher consumption of climate transition related activity, particularly by the electricity supply sector.
- Most sectors, except for extractive industries, are expected to undergo an increase in employment.
- By 2030, the increased investment in manufacturing alongside reduced VAT rates, increases disposable income and consumption, benefiting the consumer goods and services sectors.
- Higher energy efficiency led to reduced demand for coal, oil and gas, reducing employment in these extractive sectors by 8%.