The European Commission has published the 2020 edition of the report “Labour Market and Wage Developments in Europe”. The report discusses how labour market has been impacted by the deepest recession that hit the EU since World War II.
This report shows that the increase of the unemployment rate has been mitigated by the drop in the hours worked, mainly due to the widespread use of short-time work schemes, and a drastic decline in the activity rate.
The restrictions to mobility and social distancing measures, enacted by the governments or voluntarily adopted by people, to curb the spread of the COVID-19 virus led to a sudden stop in the activity of a large number of sectors.
The report characterises the groups that are more exposed to social distancing. Many workers are in occupations that require close physical interactions with clients or other workers or have tasks that cannot be completed remotely.
Most of them are women, low-educated, low-paid and young. The latter are more at risk of unemployment as they are more likely to be in temporary contracts.
The low-educated and low-paid are also at a higher risk of unemployment, as only few of them are in tele-workable occupations. Protecting vulnerable workers is necessary to mitigate the distributional effects of the pandemic.
Short-time work schemes have been the main tool to preserve jobs, protect workers’ income and avoid mass lay-offs. As the economy recovers from the health shock, the phasing-out of the schemes will allow quickly resuming production.
However, some firms might become unviable. Providing workers with support in job-search activities and training might improve their employability and ease their transitions towards expanding firms, most notably in the green and digital sectors.