“Nearly all countries have adapted, revamped, activated or introduced short-time work schemes… to prevent unemployment” in the face of Covid-19. Meanwhile, PES will need to continue responding to internal and labour market changes provoked by the crisis.

These were key conclusions of a new PES Network study on “PES measures and activities responding to Covid-19”, which also highlighted the value of ongoing and real-time PES exchanges on responses to Covid through a series of webinars organised by the PES Network.

To avoid mass unemployment, most countries have relied on Short-Time Work (STW) schemes in which workers’ hours are reduced and their income losses are financially compensated by public funds.

However, the study details important variations in such schemes, including in terms of applied restrictions, wage replacement rates, and duration. These may explain different take-up rates; while some countries have used schemes for temporary lay-offs as an alternative approach.

The study highlighted that PES’ organisational changes in response to Covid were focused on remote working of staff and increased digitalisation of services, whilst partnerships proved helpful for speeding up the introduction of new measures. These aspects may have long-lasting implications for PES’ ways of working.

Looking ahead, the study observes that processing “STW claims may continue to absorb staff capacities for a while… [but there is still] “a danger that many workers will flow out from STW schemes into unemployment in a number of countries”.

Furthermore, given the broader labour-market restructuring that is likely to result from the crisis, “it will be important that PES prepare to adapt workers in terms of skills needed”.

The study, published on 07 July 2020, was based mainly on PES’ operational information collected every second week during the period April to June 2020, including in-depth interviews and written answers from six PES.

The study also overviews important actions by the EU to counter the negative social and labour market effects of the pandemic, including:

• The Corona Response Investment Initiative (CRII) which enables flexible use of EU structural and investment funds to support SMEs;
• A new initiative to provide temporary Support to mitigate Unemployment Risks in an Emergency (SURE) in the form of loans to Member States.
• The overall EU recovery plan and budget, ‘Next Generation EU’, which includes € 55 billion of additional cohesion policy funding 2020-2022 under the new REACT-EU initiative targeting severe impacts on aspects including youth unemployment.