Labor market impacts of COVID-19 in four African countries

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Phone surveys

The first wave of empirical results from rapid phone surveys in Sub Saharan Africa (Ethiopia, Malawi, Nigeria and Uganda) confirm the devastating labor market impacts of the pandemic. But they also show that the jobs impacts are heterogeneous, with particularly severe impacts on the urban informal economy.

Many people have simply stopped working due to COVID-19. By June, in Nigeria 45% had stopped, compared to 17% in Uganda, 8% in Ethiopia, and 6% in Malawi.  The impacts are diverse and reflect also the stringency and compliance with government’s policies to limit the spread of COVID-19.

Urban informal jobs are hit hardest. About 80% of workers in the region are informal, with little or no protection against the effects of COVID-19. In all four countries, urban jobs were lost in higher proportion than in rural areas. Nigeria reported that 56% of people with urban jobs had stopped working compared to 40% for rural jobs, Uganda follows the same pattern of job loss (29% urban vs 11% rural) as well as Ethiopia (12% urban vs 6% of rural), and Malawi (8% urban vs 6% of rural). Most of the jobs in urban areas are family businesses, most of them are informal, above 80% are not officially registered, 40% conduct their business at home and 82% don’t hire employees who are not household members.

Following the outbreak, the share of working women shrank in all four countries. In Uganda and Ethiopia, more women lost their job due to Covid-19 than men. This deepens the already wide gender gap in employment.  The gap of about 15 and 14 percentage points in Uganda and Ethiopia are the widest of the four countries. In Nigeria, the gender gap did not widen among respondents. This could be explained by the different labor market characteristics. In Nigeria, the share of women who reported not to be working pre-pandemic is with 26% the highest among all four countries. It is important to note that these surveys represent one respondent per household with only about 30% of respondents being female across the countries and most of the respondents are heads of household or their spouses. The gender effects are probably even stronger for entire households and the population at large.

At the household level, labor income losses are near universal, affecting 82% of households in Malawi, 80% in Nigeria; 76% in Uganda and 46% in Ethiopia.  This decrease in household’s labor income is particularly pronounced for non-farm family businesses. But households that report having income from wage work have also been affected, 58% of households with at least one member with a waged job reported a decrease in wage income in Nigeria and Malawi, 40% in Uganda and 34% in Ethiopia. The reduced incomes reflect among others decreases in working hours.

Given the policies to prevent the spread of COVID-19, including business lockdowns and restricted face-to-face interactions, commerce has been the most affected sector followed by services throughout all countries. The impact on agriculture has been relatively small except for Nigeria, where the sector reported considerable loss of jobs. This is partly explained by differences in agricultural production. In Nigeria, a high proportion of farmers live far from their plots requiring transportation or long hours of walk to get there. Both activities not allowed under lockdown.

Households have been confronted with massive economic impacts since the outbreak started. Most commonly households experienced increases in the price of major food items (85% of households in Nigeria), increases in the price of farming/business inputs (45% in Nigeria), decrease in output prices (21% in Nigeria and 11% in Uganda), and closure of nonfarm businesses (36% in Nigeria and 14 in Uganda).

To cope with the considerable economic shock, households not only draw down their savings but also reduce food consumption. In Nigeria, 55% of households that had to deal with the shock consumed less food and 23% reduced their non-food consumption. In Uganda, 43% tapped into their savings while others relied on borrowing money or received assistance from friends & family. Given the limited economic opportunities, only about 10% of affected households could compensate the income loss through extra work.

These results confirm that phone surveys are a useful tool for informing policy responses to the COVID-19 crisis. Although they have limitations, initial technical checks confirm that the phone surveys are providing valid insights on labor market and income dynamics during the crisis. Watch this video to learn more about the initial results and hear a discussion about the technical approach.

Authors

Michael Weber

Senior Economist - Jobs Diagnostics (Supply), Labor Regulations & Social Insurance, World Bank

Amparo Palacios-Lopez

Senior Economist in the Development Data Group of the World Bank

Ivette Maria Contreras-González

Consultant, Data Production and Methods, DECDG, World Bank

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