Economic scarring - global unemployment set to remain above 200 million in 2022

A new report from from the ILO sees employment picking up strongly in countries where vaccination rates are high but risks of labour scarring effects especially in nations where vaccinations are in short supply.

Labour scarring effects refers to the potential long-term economic damage arising from economic recession and anaemic recovery.

Young people in particular risk losing out from extended periods out of work and there is a risk of hysteresis - where the long run natural rate of unemployment grows the longer a country's national output remains below pre-pandemic levels.

According to the FT article: "There will be 205m unemployed people across the globe in 2022 according to the ILO, well above the pre-pandemic level of 187m in 2019 and corresponding to a rate of 5.7 per cent, the highest since 2013 other than during the pandemic last year."

Here is the link to the ILO report for those who want to explore this issue in more detail.

Economic scarring refers to the medium-long term damage done to the economies of one or more countries following a severe economic shock which then leads to a recession. Scarring can manifest itself in several ways including a slowdown or absolute fall in a country’s estimated potential GDP and their long-term trend growth rate.