This article is authored by Bettina Schaller, President of World Employment Confederation and Senior Vice President and Head of Group Public Affairs at The Adecco Group.
For anyone interested in how governments intervene in labour markets, the pandemic has offered much to analyse. Usually it takes years for interventions to unfold, and it is challenging to link cause and effect. It has been possible to track impacts of Covid measures much more quickly and clearly.
At the Adecco Group, we have been closely tracking the course of the pandemic and the economic recovery across 20 countries. Here are eight key lessons from our latest analysis.
1. Countries that invested most did best
In general, we found that governments that invested most in supporting labour markets saw the best results in terms of minimising unemployment and returning more quickly to growth. Singapore, USA, Australia, New Zealand and Canada invested most in “above the line” support – public spending or tax reductions – and enjoyed the strongest economic recoveries.
2. Saving lives saves the economy
At the time of our analysis – which concluded just before the emergence of the Omicron variant – three countries stood out for how well they had handled the pandemic overall, encompassing both health and economic impacts: South Korea, Australia and New Zealand. In all three cases, the strong economic performance is rooted in their success in minimising infection.
South Korea, in particular, shows that when the health situation is well controlled, economic support can be targeted efficiently: it performed well despite spending just 6.4% of GDP – a quarter of the amount spent in some other countries, such as the USA.
3. Border controls were the key lockdown measure
Counter-intuitively, our analysis found no clear link between the stringency of lockdown measures and the impacts of the virus, with one exception: border controls. However, we believe this finding may have only limited use for the future, for two reasons.
First, it is harder for countries with land borders to control movement of people: it is no coincidence that South Korea, Australia and New Zealand are all islands. Second, there is overwhelming evidence from before the pandemic that cross-border mobility of talent boosts economies, so border controls may quickly become counterproductive. Already many countries are seeing labour shortages linked to pandemic-related restrictions on movement.