The COVID-19 pandemic caused many people to lose their jobs and forced many more to be temporarily out of work. However, at that time there was very limited information on employment data available for the policy makers to predict the impact on employment.
Typically, a country’s employment data is collected by conducting a Labour Force Survey. Due to the geographical nature of our economy, frequently conducting such a survey can be costly. Following data privacy and protection protocols, the Ministry of Economic Development decided to use anonymous data from the pension office as an alternative for the purpose of research. The advantage is, that the data is available at higher frequencies and is more cost-efficient. However, it has some limitations as the pension system is not designed to collect employment data. For instance, it does not have data on informal sector employees, and only the basic wage is being reported to the Pension Office.
An initial challenge was that pension data was not classified in accordance with the International Standard Industrial Classification, which is important to understand how employment was affected in different sectors of the economy. To address this, the Ministry, in collaboration with the Pension Office, conducted a thorough exercise of coding all pension data to align with international classifications.
Using the administrative data obtained from the Pension Office as a proxy to gauge the labour market developments, the Ministry conducted an intensive research to understand impact of pandemic on employment in different sectors, the inflow and outflow of labour, and the impact on different demographics.
While employment in tourist resorts took the brunt of the hit, transport sector is another key sector which was hit hard by the pandemic, due to its high dependency on the tourism sector. Public administration which has the highest number of employees in the formal sector, saw a slow down during the pandemic. However, wholesale and retail sector—the third largest contributor of employment—fared better and saw remarkable growth during the pandemic period.
Although the unprecedented loss of jobs left the country facing enormous challenges, it was partly cushioned by the quick and effective policy responses such as the stimulus packages introduced by the Government. However, the short-term displacements in employment were sudden and severe. To adjust to the pandemic’s cost and survive in a post-pandemic economy, we observed a lot of workers moved between different sectors.
A large portion of the employees who left the tourism sector temporarily took jobs in the wholesale and retail sector, and construction sector in 2020. Once the tourism sector started to recover, employees gradually started to move back to tourist resorts and tourism-sector related work such as diving and water sports. Interestingly, the construction sector continues to receive employees from the tourism sector in 2021. This could be a sign of positive restructuration of economic activities as the country moves forward in the recovery phase. But we are still in the wake of the pandemic and some of the effects from the pandemic may or may not be long-lasting.
We also estimated the number of employees who joined the labour market for the first time throughout the entire employment history in the pension system and the number of employees who have left and have not yet joined the market. The exited workers could have left the market due to retirement, migration, or could have left for studies or even have moved to the informal sector or the economically inactive population. We observed that there is a trend of employees leaving the formal market and this is more prevalent among the youth age population and men. Further, the number of
new entrants to the labour market has been stagnant over the past few years and the share of male workers entering as fresh entrants to the market has declined over the years.
With all these disruptions and displacements, the labour market remains vulnerable, and the vulnerabilities have been widening across different demographic segments. For instance, returning to work after the pandemic seems more difficult for women. And compared to the average basic wage of men, the average basic wage of women still lags behind. Youth employment was devastatingly affected by the pandemic. Further analysis on contract gaps also revealed that the youth are taking more time to find their next job.
It is apparent that the great magnitude of the employment shock was observed across different sectors, and that it had a disproportionate effect on different demographic segments. Therefore, resolute measures are required to restore and rebuild a more resilient and an inclusive labour market.