HCMC – Youth and women were among the most vulnerable to job losses during the Covid-19 pandemic, according to a recent report of the Asian Development Bank (ADB).
Young workers were more likely to lose their jobs mainly because they dominated hard-hit sectors such as hotels and restaurants, as well as wholesale and retail trade, while women were more likely to leave the labor force, mainly to take care of their families during the pandemic.
The ADB report showed that youth accounted for as much as 45% of job losses in Vietnam in the second quarter of 2020, representing the peak of the labor market impact of the crisis, despite representing only some 12% of the country’s total employment.
Youth represented a higher-than-average share of the workforce in hard-hit sectors such as manufacturing, wholesale and retail, construction, transport and storage, accommodation and food service, and education.
They were also disproportionately affected in terms of job cuts in these sectors, often due to less experience and being less likely to have permanent contract arrangements, making them the first to be let go during the crisis.
In the three youngest age cohorts in Vietnam, net transitions from employment out of the labor force were accompanied by transitions from unemployment out of the labor force as well.
The recovery of employment for youth also lagged behind that of adults. While the adult employment-to-population ratio (EPR) and labor force participation rate (LFPR) had partially recovered by the fourth quarter of 2020, the youth EPR and LFPR continued to decline throughout 2020 and the first half of 2021.
By the second quarter of 2021, the youth EPR in Vietnam stood at 39.9%, more than 12 percentage points below its pre-crisis (the fourth quarter of 2019) level, and the youth unemployment rate had reached the highest point since the onset of the pandemic.
Women were disproportionately affected as well, recording a greater share in job losses than their share in employment. They represented 47% of the country’s workforce and accounted for half of the net job losses.
The share of females who lost their jobs was higher than the share of females employed in manufacturing, financial intermediation and insurance, administrative and support services, human health, and other service activities.
Particularly, the manufacturing sector accounted for approximately 38% of net wage employment losses for women in the second quarter of 2020, compared with 28% for men.
The report found that more females moved into inactivity following job losses while more males moved into unemployment. The massive labor force exits among women are largely a consequence of their greater involvement in the care burden, such as childcare, homeschooling and caring for ill relatives.
Examining transitions in and out of the labor force for different age and sex cohorts revealed that, in general, women were indeed more likely than men to exit the labor force. However, these women were quicker to reenter the labor market than men. This may reflect a faster rebound of informal employment than formal wage employment.
There also seems to be an added-worker effect in which additional women workers joined the labor force to compensate for the lost jobs and incomes of other household members.
The higher rebound in the female labor force participation (relative to men) and the added-worker effect suggested that employment created during the recovery period could be of lower quality than employment lost due to the crisis.
The pandemic also exacerbated growing inequalities between skilled and unskilled workers, hurting low-skilled workers as well as middle-skilled workers, whose jobs face automation or being moved elsewhere. Informal workers, self-employed workers, temporary workers, and migrant workers were among the most vulnerable groups.
Unlike in previous crises, supply chain disruptions, a decline in domestic and international demand, mobility and travel restrictions, and limited possibilities of working remotely led to massive job cuts in agriculture, wholesale, and retail, the sectors that would normally absorb displaced workers during a crisis.
Micro, small, and medium-sized enterprises were disproportionately affected by job cuts because they had less liquidity or access to government support.
“The pandemic and the risk of slower economic growth and increased inequalities have underscored the need for fiscal policy to go beyond its countercyclical role through increased investments in social protection and its infrastructure,” said ADB Director of Human and Social Development for Southeast Asia Ayako Inagaki.
Inagaki suggested the Government boost investments in human capital and mobilize domestic resources to build inclusive, sustainable social protection programs and increase social insurance contributions.