27 September 2020   Leave a comment

The International Labour Organization (ILO) has issued a report entitled “COVID-19 leads to massive labour income losses worldwide” a not surprising finding. The stock market has increased in value during the pandemic, thanks largely to the favorable tax and monetary policies pursued by the Trump Administration.

While the owners of capital have prospered, the ones that only have their labor to sell have suffered. According to the ILO:

“Global labour income is estimated to have declined by 10.7 per cent, or US$ 3.5 trillion, in the first three quarters of 2020, compared with the same period in 2019. This figure excludes income support provided through government measures.

“The biggest drop was in lower-middle income countries, where the labour income losses reached 15.1 per cent, with the Americas the hardest hit region at 12.1 per cent.”

The ILO is also projecting that these losses will continue. The study suggests that there have been greater losses to labor from inactivity (reduced hours) than from unemployment, which represents a serious problem for recovery:

“This rise in inactivity has important policy implications.
Experience from earlier crises shows that activating
inactive people is even harder than re-employing
the unemployed, so higher inactivity rates are
likely to make the job recovery more difficult.
Moreover, younger and older people have been hit
particularly hard by the COVID‑19 crisis: since these
two groups normally have a higher risk of becoming
inactive, there is a danger that they will face long-term
labour market disadvantages”

It may be the case that the rich are congratulating themselves for gaming the system to help them accumulate capital. At some point, however, there will be no one who will be able to buy the products that the rich produce. The continuing impoverishment of the lower income citizens will bring the economy to a stop, as happened in the 1930s.

Posted September 27, 2020 by vferraro1971 in World Politics

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