Warning that one-third of Afri

Warning that one-third of African jobs are vulnerable due to pandemic

Between 9-million and 18-million formal jobs on the continent could be lost, new report by McKinsey says.

Warning that one-third of Afri

Jobs or incomes are vulnerable for one-third of the African workforce as a result of the spread of the COVID-19 pandemic, global management consultancy McKinsey has warned in a new report.

“Analysis suggests that between 9-million and 18-million formal jobs in Africa could be lost or made redundant,” the consultancy says as part of a study entitled ‘Finding Africa’s path: Shaping bold solutions to save lives and livelihoods in the COVID-19 crisis’.

According to McKinsey, a further 30-million to 35-million formal jobs are at risk of reductions in wage and working hours as a result of reduced demand and enforced lockdowns.

In some sectors half the African workforce could be impacted

This puts the jobs of one-third of Africa’s formal-sector workers at risk of significant impact. In major sectors such as manufacturing, retail and wholesale, tourism, and construction, the jobs of more than half the workforce could be affected.

“In addition, our analysis shows that approximately 100-million informal jobs are in occupations and sectors that are vulnerable to loss of income during the crisis,” McKinsey says.

Most members of Africa’s informal-sector workforce are involved in subsistence agriculture, and are less likely to be affected. But as many as 35-million informal sales and service jobs in the wholesale and retail sector are vulnerable, as are about 15-million casual craft, trade and plant-operating jobs in the manufacturing and construction sectors.

Major additional economy stimulus may be needed

The report notes that major additional stimulus may be required to mitigate damage to the continent’s economies and livelihoods.

“Across the African continent, a range of initiatives has already been launched to help mitigate the impact of the COVID-19 crisis. In addition to these efforts, governments and development institutions might consider much larger stimulus packages than those implemented to date.”

McKinsey adds: “To ensure that such stimulus helps safeguard the livelihoods at risk, it will be important to target it to support the most vulnerable households, reach small businesses, and protect both the economy and jobs.”

Government stimulus measures to date have been small

According to the consultancy, the stimulus measures announced to date by several African governments are relatively small, amounting to between 1 and 1.5% of GDP. In some cases, these measures have also been matched with reductions in government spending of between 1 and 1.5% of GDP.

“Even with well-targeted fiscal-stimulus measures, which can have a multiplier effect on GDP, African countries could still be left with a gap of five percentage points of GDP growth to return to pre-crisis levels, and one to two percentage points to avoid an economic contraction.”