The Impact of the COVID-19 Crisis on Middle-income Countries

Abstract

Coming on top of long-term employment challenges, the COVID-19 crisis has severely impacted economies around the world. Due to the nature of their labour markets, middle-income countries (MICs), including India, have experienced greater employment declines than advanced economies. Some sectors have been hit harder than others, while certain groups—including women, youth, migrants and those in the informal economy—have felt the brunt of the crisis even more strongly. The crisis has raised unemployment and, even more, has also pushed many out of the labour force, raising inactivity. Overall, the crisis has exacerbated existing inequalities in countries and across countries. The major challenge for MICs is to finance the continuing efforts to battle the crisis while shifting to a job-rich and inclusive recovery. Key lessons have already emerged, which are relevant for India and other developing countries, including the importance of building a more resilient and inclusive labour market through strong institutions and policies.JEL Codes: E24, E60, G01, J08, J60