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- People are Losing Jobs in Covit 19 Lockdown
- Job Certainty is Illusion
- Financial Security – Your Self Assessment
People are Losing Jobs in Covit 19 Lockdown
According to ILO (International Labour Organization), COVID-19 may deteriorate 305 million full-time jobs in 2Q 2020. The same report said;
The continued sharp decline in working hours globally due to the COVID-19 outbreak means that 1.6 billion workers in the informal economy – that is nearly half of the global workforce – stand in immediate danger of having their livelihoods destroyed, warns the International Labour Organization.
In G7 countries, the unemployment spiked at the beginning of the lock-down and showed a recovery like the below chart from the World Economic Forum shows;
However, we don’t know if such recovery continues given the fear of the 2nd wave.
Job Certainty is Illusion
As a matter of fact, before coronavirus pandemic outbroke, we had already known that Job certainty is completely an illusion especially among middle-class people. We will show you in several charts.
Income Inequality – Gini Index
Let me share a bit about World Income Inequality measured by GINI Coefficient. What is the Gini Index?
Remember the impact of the recession in the UK was relatively mild among the developed countries. Only 20% of people made redundant could find a new job within 3 months, and 75% of them are paid less in the next job. This is the harsh reality, and the economy is cyclical and the bubble will burst at any time out of the blue on top of the unprecedented coronavirus pandemic.
It means your life is always exposed to the threat of losing a job. Still not convinced? Allow me to substantiate how the middle class should feel a pinch and a sense of urgency with further numbers & different perspectives.
Middle Class Is Really In Danger
World Inequality in Wealth Distribution
The above World Inequality Lab report says;
Tax & Social Benefit – Not For Middle Class
Needless to say, the welfare benefit is for the lower class. The principle of the below US case shown in the chart applies more or less to many developed countries. And, people in the middle class will shout “How come someone earning $36 an hour can have a lower household income than someone earning $8 an hour.”;
So, lower-income class people are protected by social benefits, therefore you as the middle class tend to be most squeezed.
Uncertainties You Will Face
Uncertainty and fears of social decline and exclusion have reached the middle classes in many societies. The uncertainties in the middle class, especially in advanced countries, attribute to the gloomy job market as follows;
Globalization – Job Outsourcing
The IMF report(Finance and Development, A quarterly magazine of the IMF Vol.45) indicates the massive income transfer to poorest 30% population is happening, means advanced countries job are being outsourced to the developing countries. The higher the income inequality less positive toward globalization, in other words, the globalization spurs the inequality by squeezing middle-class jobs.
Technologies – Robot will take over your job
Oxford University research summarizes (for details), among 702 occupations in 12 categories of total US employment, nearly 70% is at high to medium risk of getting replaced by robots over some unspecified number of years perhaps a decade or two. As seen from the chart, the unlikely job is a high-end skill-oriented job, which is another reason the middle class should worry. The middle class is In the Vulnerable Status.
The Latest OECD Report Confirms Middle classes losing out to ultra-rich
BBC summarized the latest OECD report by saying “the middle classes are being “hollowed out”, with declining chances of rising prosperity and growing fears of job insecurity.” It shows Middle-Class Dismal Growth as;
Financial Security – Your Self Assessment
Assess Your Income Status In Your Society
Firstly, examine How Accurately You Grasp Your Income Status In Your Society. Wherever you live, just assess your Income in comparison with the rest of the population in your country and know the difference between What You Perceive & Reality. Clicking OECD, which will navigate you to the below page; Does your original perception match the reality? And, if you’re fortunate enough to be in the Top 1 % of Income, you may not need to assess further. However, if you belong to the rest of the 99% population, then you may want to assess how you are secured for your retirement.
Spare Another 1 Minutes To Assess Yourself Further for Your Long Future!!!
Let’s Examine How Well You’re Ready For Your Retirement
Go To Fidelity Retirement Score, answer 6 simple questions then you will get the retirement score like below. The underlying assumptions (inflation, social security & tax etc) of this software is based on US parameters thus your condition may differ though the objective here is not making an accurate simulation just trying to roughly assess how well you are fit for your future retirement life. Therefore don’t take it seriously. If the score doesn’t reach On Target, it’s a sort of indication that you may need to improve some factor(s).
So, how did you assess your financial status?
It’s said that you need the contingency savings worth at least 6-month salary.
Otherwise, you will be in serious trouble when an unwelcome event such as job loss actually happens to you. Unless you’re happy-go-lucky person, it’s better to start making extra money conveniently e.g. online, as your Safety Net.
Yes, Diversify Your Income For A Rainy Day while you have a daily job.
So, how can you do it? Go 3 Clever Ways to Diversify Your Income for a Rainy Day.
Joshua Walker (bio)
Editor – Global Extra Money (GEM)