Cabo Verde: Covid-19 causes 20,000 job loses, unemployment soars to almost 20pct

The economic crisis caused by the Covid-19 pandemic is expected to lead to the loss of 19,800 jobs in Cabo Verde this year, with the unemployment rate skyrocketing to nearly 20%, the government predicts.

The forecast is in a supporting document to the proposal of the Amending Budget for 2020 presented on Tuesday to parliament by the Cape Verdean government, which estimates that the country will end the year with an unemployment rate of 19.2% (of the active population), which compares with the 11.3% at the end of 2019 and with the 11.4% in the state budget still in force, approved in December.

The situation mainly affects tourism, which represents 25% of all wealth produced annually by the country, which in 2019 received more than 819,000 tourists.

The government document states that by May 1,064 unemployment benefit cases had been processed and five million escudos (€45,000) paid in those benefits.  

The bulk of the economic impact has, for the time being, been minimised with the simplified temporary layoff approved by the government, as a mitigating measure of the economic crisis caused by the confinement that has totally stopped activity in the country.

More than 11,000 Cape Verdean workers saw their employment contracts suspended (April to June), receiving 70% of their wages, supported in equal parts by the employer and the National Institute of Social Security, which cost the state 155 million escudos (€1.4 million) a month, the same document said.

As measures to protect and promote jobs, the government has defined in this new budget proposal for 2020, which should be discussed in the second week of July in parliament, the extension of professional internships from six to eight months and an increase in the state’s contribution, which will cost 289 million escudos (€2.6 million).

There will also be the “promotion of hiring”, through tax benefits and the state’s 50% share in a charge to the public coffers of 70 million escudos (€632,000).

“This situation represents a shock for labour supply, since only essential services remained in operation, culminating in a drop in the economy’s productivity,” it said.

The country’s lockdown resulted in an estimated loss of 6.3% of Gross Domestic Product (GDP).

The Cabo Verde archipelago has had 1,227 cases of the disease diagnosed since March 19 and a total of 15 deaths, but 608 have already recovered.

The economic and health crisis caused by the Covid-19 pandemic in Cabo Verde will force the government to increase this year’s state budget by 2.7% to 75 billion escudos (€680 million), but the government has guaranteed that there will be no wage cuts or tax increases.

The covid-19 pandemic has claimed more than 507,000 lives and infected more than 10.37 million people in 196 countries and territories, according to a report by the French agency AFP.