Women, young people and low earners are getting hurt most by jobs crisis
The jobs crisis created by the pandemic will last years.Posted — Updated
That's according to a new report from the Organization for Economic Cooperation and Development, which said Tuesday that unemployment is far worse than what followed the 2008 financial crisis and will persist at elevated levels at least until 2022.
The Paris-based agency encouraged countries to extend unemployment benefits and other relief measures as necessary, especially given that low-wage workers, young people and women are "bearing the brunt of the crisis."
"Despite the massive measures taken around the globe, uncertainty about future labor market developments is large, as the risk of new outbreaks is high," said Stefano Scarpetta, the OECD's director for employment, labor and social affairs. "Much of what will happen depends on the evolution of the pandemic."
Top-earning workers were 50% more likely to work from home than low earners during lockdown, the OECD said, while women, who are more likely to be employed in struggling sectors, have been hit harder than men.
In the most optimistic scenario, where the virus continues to recede and remains under control, the agency predicts that unemployment will hit 9.4% on average in OECD countries at the end of 2020 — the worst reading since the Great Depression — before falling to 7.7% at the end of 2021. In late 2019, before Covid-19 hit, the unemployment rate for OECD countries was 5.3%.
The outlook appears even worse in the event of a second wave of infections late this year. The OECD thinks unemployment would then rise to 12.6% before easing to 8.9% in 2021.
Why it matters: The warning comes as governments debate how to extend or amend costly relief to the jobless and struggling firms, which has so far been crucial in protecting some positions.
The Trump administration on Monday released data on roughly 4.8 million small businesses that have tapped more than $520 billion in loans through its Paycheck Protection Program — a central pillar of the $2 trillion emergency economic relief efforts deployed in March.
The program was so critical at its inception that a first round of funding dried up in less than two weeks. But interest has waned recently as changing rules and borrowers' inability to come back for a second loan has limited applications.
Europe's response: The OECD noted that part-time work programs, which encourage employers to keep workers on payroll even if they're not putting in full hours, have been hugely successful in limiting unemployment in countries like Germany, assisting an estimated 60 million people. But the situation remains in flux.
On Tuesday, the European Commission downgraded its economic outlook for the 19 countries that use the euro, predicting an 8.7% contraction in 2020 and 6.1% growth in 2021. That's a big change from the previous forecast, which had the euro area economy shrinking 7.7% this year. It had also penciled in more robust growth in 2021.
Watch this space: The OECD said that almost half of all jobs "require frequent interactions," putting workers at risk of infection as economies reopen. The agency said this means governments and companies must prioritize workplace safety and guarantee "extensive" paid sick leave to keep a lid on contagion in the months ahead.
TikTok is leaving Hong Kong
TikTok says it will exit Hong Kong, following other big tech firms that have expressed wariness about operating in the financial hub after China imposed a controversial national security law there, my CNN Business colleague Sherisse Pham reports.
"In light of recent events, we've decided to stop operations of the TikTok app in Hong Kong," a TikTok spokesperson confirmed to CNN Business.
It is unclear when TikTok — which is owned by Beijing-based startup ByteDance — will exit Hong Kong, and what that will mean for the app's users in the city.
Big picture: TikTok's announcement comes as Facebook, Twitter, Google and Zoom said they would stop processing Hong Kong government requests for user data while they carry out an assessment of the new law.
Imposed last week by Beijing, the law criminalizes secession, subversion, terrorism and collusion with foreign powers. It marks a sweeping change that critics say is an attack on freedoms of speech and the press that have long existed in Hong Kong, but are prohibited in mainland China.
On the radar: As tech companies scramble to figure out their next moves, TikTok is poised to become a major source of tension between Washington and Beijing.
US Secretary of State Mike Pompeo warned Monday night that the United States is "looking at" banning TikTok and other Chinese social media apps.
People should only download TikTok "if you want your private information in the hands of the Chinese Communist Party," Pompeo said in an interview on Fox News.
Palantir files for highly-anticipated IPO
Palantir Technologies, the secretive Silicon Valley data company, is about to become a little more transparent, my CNN Business colleague Charles Riley reports.
What's happening: Palantir has filed paperwork with the US Securities and Exchange Commission to issue shares in an initial public offering.
The company said in a brief statement on Monday that it had started a confidential process to list its shares after the SEC completes a review.
Palantir did not disclose any financial information, or further details about its plans for the listing. But the move tees up a highly anticipated IPO and presages the release of more information about a closely-watched company, long the subject of speculation among tech investors.
What we know: Founded more than 15 years ago by tech heavyweights including famed investor Peter Thiel and Alex Karp, its CEO, Palantir has worked with US government agencies such as the CIA and FBI, earning the data crunching firm a shadowy reputation and a reported valuation of roughly $20 billion.
Yet relatively little is known about the company's operations. Palantir touts its ability to manage and secure data at a massive scale, but says little about which corporations or governments purchase its services.
More transparency: Going public will eventually require Palantir to reveal additional information about its business. But its chosen route to an IPO will keep a wrap on any blockbuster details for a while longer. The confidential IPO filing process lets a company privately file its registration statement, known as an S-1, with the SEC for review.
This allows it to keep sensitive information out of the hands of competitors, customers and investors until it is closer to being ready to list its shares.
US job openings for May post at 10 a.m. ET, and Levi Strauss reports earnings after US markets close.
Coming tomorrow: UK Chancellor Rishi Sunak unveils new measures to prop up the British economy. The OECD has forecast that the United Kingdom will take the largest hit among major economies this year as a result of the coronavirus pandemic.
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