The Unemployment Rate Amid the COVID-19 Pandemic: Propose the Best Practices Policy to Maintain Labor Market Stability

Nazaruddin Malik(1), Muhammad Sri Wahyudi Suliswanto(2*), Mochamad Rofik(3)

(1) Department of Development Economics, Faculty of Economics and Business, Universitas Muhammadiyah Malang, Indonesia
(2) Department of Development Economics, Faculty of Economics and Business, Universitas Muhammadiyah Malang, Indonesia
(3) Center for Economics, Business and Entrepreneurship Development, Faculty of Economics and Business, Universitas Muhammadiyah Malang, Indonesia
(*) Corresponding Author


This study analyzes the impact of the shocks caused by the COVID-19 pandemic on the labor market. The research is vital for expanding the literature about maintaining the unemployment rate amid crisis, ultimately reducing unnecessary social costs. The quantitative approach in this study uses a Granger causality test to understand the effect of the shock caused by the COVID-19 pandemic on unemployment. Meanwhile, the qualitative approach in this study uses literature related to economic growth, crisis management, and unemployment. Granger causality tests show that economic slowdown hurts the unemployment rate. Based on discussion and synthesis from works of literature, this paper recommends some of the policies to maintain growth and prevent a more severe collapse in the labor market; the government needs to sustain aggregate demand and supply. Also, ensure the supply chain runs well amid various restrictions. Besides, this paper also proposes that the government maximizes alternative budget resources. Meanwhile, strengthening the labor system and developing health and food security industries must be a priority policy amid-post the pandemic.


COVID-19; pandemic; unemployment; labor market

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