Covid-19 propels joblessness to businesses’ top concern
Unemployment caused by pandemic compounds crisis that was well under way before outbreak
Enormous job losses in the wake of the Covid-19 lockdowns worldwide have propelled unemployment to the top of risks to doing business identified by business executives.
The World Economic Forum's (WEF's) “Regional Risks for Doing Business 2020” survey, for which more than 12,000 business leaders from 127 countries were polled, also shows infectious diseases jumping 28 places to second place as the world faces an unprecedented health emergency that closed down key industries and heavily affected industries such as tourism.
With governments having to boost spending and borrowing to mitigate the fallout, the potential of fiscal crises remains high among topics of concern, though it fell from first to third.
The job losses caused by the pandemic, with SA having lost more than 2-million jobs in the second quarter that included the period when the lockdown was hardest, is compounding an economic crisis that was well under way before the Covid-19 outbreak.
Investors are awaiting finance minister Tito Mboweni’s medium-term budget policy statement later in October to hear how he plans to address a fiscal crisis that is set to push the 2020 budget deficit to nearly 16% of GDP.
“The employment disruptions caused by the pandemic, rising automation and the transition to greener economies are fundamentally changing labour markets,” Saadia Zahidi, MD of the WEF, said.
“As we emerge from the crisis, leaders have a remarkable opportunity to create new jobs, support living wages, and reimagine social safety nets to adequately meet the challenges in the labour markets of tomorrow,” Zahidi said.
The study was conducted with global advisory firm Marsh & McLennan Companies, Zurich Insurance Group and South Korea’s SK Group.
The emergence of the virus put infectious diseases in the spotlight and was among the top 10 risks in all quizzed regions, except South Asia. Other surveyed regions include East Asia and the Pacific, Eurasia, Europe, Latin America and the Caribbean, Middle East and North Africa, North America and Sub-Saharan Africa.
The survey lists 30 risks, including terrorist attacks, extreme weather events and state collapse or crisis.
While economics dominates the list of risks, climate-related concerns gained more prominence in 2020, with natural catastrophes, extreme weather events, biodiversity loss and ecosystem collapse, and failure of climate-change adaptation up two to eight places.
While Covid-19 is distracting from some long-term risks it “is also having the positive effect of leading many to reassess priorities”, Zurich Insurance Group chief risk officer Peter Giger said. “This, I hope, will ensure that businesses advance their risk resilience strategies and result in decisive and impactful action to combat existential risks like climate change.”
In Africa, the top risks are unemployment or underemployment, failure of national governance, failure of critical infrastructure, the spread of infectious disease and energy price shocks.
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