World Bank study shows epidemics hurt labour productivity, bigger impact on EMs
- Four major epidemics, excluding Swine flu, lowered labour productivity by 1%, and by 4% cumulatively after 3 years
- Uncertainty over covid-19 longevity will weigh on investment and hinder trade and FDI, the Worrld Bank report said
MUMBAI: A latest study by the World Bank analyses the impact of epidemics on global productivity. Its findings show that previous epidemics left lasting scars on labour productivity.
“There were five epidemics during the period 2000-2018: SARS (2002-03), Swine flu (2009), MERS (2012), Ebola (2014-15), and Zika (2015-16). These four major epidemics, excluding the Swine flu since it coincides with the global financial crisis to avoid compounding effects, lowered labour productivity initially by 1%, and by 4% cumulatively after three years,” said the World Bank report.
The report further added that these severe epidemics seem to adversely affect labour productivity, primarily through investment, which declined by 9% after three years due to increased uncertainty. Unfortunately, there has been a broad-based slowdown in labour productivity growth since the 2007-09 global financial crisis. In addition to the health crisis, the uncertainty about the duration of the covid-19 pandemic will weigh on investment and hinder trade and foreign direct investment, said the World Bank report.
The report, first of its kind, draws from a comprehensive dataset covering 35 advanced economies and 129 emerging market and developing economies. It finds factors that have spurred productivity growth, such as working age population growth, educational attainment, and growth of global value chains, have faded or gone into reverse since the 2007-09 global financial crisis.
“Productivity levels in emerging markets and developing economies remain less than 20% of the average in advanced economies, and only 2% in low income countries,” said World Bank Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu.
The findings show that emerging market and developing economies have historically lagged advanced economies in productivity levels and the current drop in global manufacturing, slower trade growth, erosion of human capital, and weak outlook for commodity prices may make closing the gap harder.
A possible silver lining may be that changes in behavior from the pandemic will accelerate the adoption of new technologies, greater efficiencies among businesses, and the pace of scientific innovation. Pazarbasioglu said it it is vital to ensure that these gains are widely distributed and that technology-driven labour market disruptions are well managed.
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Business NewsNewsIndiaWorld Bank study shows epidemics hurt labour productivity, bigger impact on EMs
First Published:20 Jul 2020, 09:26 AM IST
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