The second wave of COVID-19 in Lao PDR could push up to a quarter of the workforce out of work
We knew the second wave of COVID-19 in Lao PDR and the subsequent lockdown would be difficult for workers and their families. However, we had hoped the impact of the pandemic would not be this severe.
We at Mekong Impact Lab have been working on ways to estimate the impact of the second wave COVID-19 lockdown on jobs in Lao PDR.
It is a complicated task, with few precedents in the research literature.
The results, detailed in our new report: Lockdown: Estimating the employment shock from second wave COVID-19 in Lao PDR, are distressing.
We estimate that between an eighth and a quarter of Lao PDR’s workforce – excluding self-employed individuals – is likely to be out of work because of COVID-19 lockdown and physical distancing.
It derives from multiple sources of information.
The basis of this research is data from the United States Department of Labor on the amount to which each occupation requires workers to be near other people and if they can work remotely.
The physical proximity requirements of a job and the ability to work from home are likely to be good indicators of how likely a worker will be laid off – permanently or temporarily – during the lockdown.
Our second source of information is a set of estimates by the Grattan Institute of the magnitude to which jobs are under threat in each industry in Australia. We assume the estimates for Australia are applicable for Lao PDR, given the similarities of the COVID-19 response policies in each country.
Our preferred method for estimating the employment shock is an average of these sources.
We also use two complementary approaches, each of which relies on a single source of data, representing lower and upper bounds.
Figure 1: About one-eighth to one-fourth of workers in Lao PDR are likely to be out of work due to the second-wave COVID-19 lockdown.
Our preferred method finds that about 18.75% of workers could be out of work due to government-mandated lockdown and physical distancing.
Figure 2: Workers in accommodation and food services are most at risk in Lao PDR.
Unsurprisingly, we find that workers in accommodation and food services will likely be the hardest hit, with more than half of workers in that industry out of work.
Economic activities classified as arts, entertainment and recreation are not far behind accommodation and food services.
A range of other industries – where people are more likely to work remotely – are much less likely to lay off workers in the weeks and maybe months ahead.
Our paper represents our best attempt to estimate the size of the shock under conditions of extreme uncertainty and limited information.
In some cases, our preferred method yields results that are likely overestimating the share of workers who are at risk of joblessness. This includes industries such as finance and insurance activities and mining and quarrying.
Nonetheless, our estimates strongly correlate with anticipated layoff figures by firms in response to the first wave.
Figure 3: Our preferred method of industry-level job loss estimates is broadly in line with LNCCI survey data.
While our estimates are not akin to a crystal ball, it is clear that Lao PDR now faces one of the worst employment shocks in its modern history.
Click the link below to download our report.