In fact, informal work fell sharply at the peak of the crisis when contact-intensive sectors, which tend to have higher shares of informal employment, were hit hard by social distancing efforts. We also see a marked impact on the extent of informal work-which is widespread in many of these economies. However, workers in many G20 emerging market economies face a very different outlook, with employment rates remaining below pre-pandemic projections due to weaker economic recoveries. Moreover, initial worries that the pandemic would create large-scale mismatch between workers’ skills and employers’ labor demand-due to persistent shifts in activity across sectors, for example-haven’t materialized so far. In fact, advanced economies have experienced strong labor market recoveries, thanks to robust policy support and widespread vaccination. This time around, the prospects for such job market scarring look very different between G20 advanced and emerging market economies. Such losses harm not only affected workers but also reduce overall economic output. They may find it hard to find a new position during the recovery and may lose some skills from prolonged joblessness. Recessions often have lasting impacts on workers who lose jobs at the depths of the downturn. Policymakers must act promptly to repair the damage from the crisis and prevent decades of diminished economic output from lost human capital. Our new analytical work finds that, among the key causes of scarring from the pandemic are the prospective weak labor market recoveries in emerging market economies and the severe disruptions to schooling over the past two years across both advanced and emerging economies. For many economies, the outbreak of the war in Ukraine is adding to the challenges. Emerging market economies are likely to endure greater losses because they had relatively less access to vaccines and their pandemic-support packages were smaller. ![]() Pandemic-induced losses for both economic output and employment will be significant in coming years, as discussed in our April World Economic Outlook. The Group of Twenty economies continue their recoveries from the pandemic, but the unprecedented shock could still leave long-lasting scars that reduce economic prospects compared with their pre-crisis trends. Challenges facing emerging market workers and students everywhere could turn to long-term damage.
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