Leadership Strategy

Unemployment Lower In Europe Than U.S., But The Worst Is Still To Come


In Europe, things are at last starting to look up. Lockdowns are tentatively being lifted as death rates slow, and across the coronavirus ravaged continent, life is returning to some semblance of normality—save for the thousands who’ve lost a job.

Unemployment rates across the EU hit 6.6% in April, new statistics reveal, marking a sudden end to Europe’s seven-year recruitment recovery. In Spain, a nation particularly blighted by Covid-19, joblessness is fast approaching 15%, while in Germany, which has seen comparatively few virus-linked deaths, 6.3% of the population is out of work.  

In truth, these numbers are not as bad as many feared, given the pandemic’s scale. And when compared with America, where experts say unemployment could soon reach 20%, it would appear that Europe’s labor market has escaped relatively unscathed.  

But scratch below the surface, and all is not as it appears. 

To be considered unemployed in Europe, an individual must be actively seeking work with a view to start within a fortnight. Those without employment but not looking for a new role are deemed economically inactive.

With the onset of coronavirus, the ranks of the latter have swollen immeasurably—job hunting doesn’t easily square with the constraints of 24/7 childcare and social distancing.

In Italy, for example, 274,000 jobs were lost between March and April, though the official unemployment rate fell by almost 2%, with three-quarters-of-a-million registered as “inactive.”

It’s not all a statistical fudge, however. Europe has vigorously embraced job retention programmes as a means to cushion the contagion’s economic blow. These so-called furlough schemes see the state cover a significant proportion of idled employees’ salaries to avoid mass redundancies while businesses are in pandemic-mandated stasis.

While popular, it’s an expensive option for governments—the U.K. alone has dolled out some £350 billion ($440 billion) to keep employers afloat, a stratospheric sum that has swollen the country’s public debt burden.

There’s also a dismal sense of inevitability about furloughing: when the government money stops, companies will go under, and jobs that were previously shielded will be lost. 

This warning was echoed by three former U.K. finance ministers recently. Alistair Darling, George Osborne, and Philip Hammond said on Wednesday that Britain should brace for unemployment on a scale not seen since the 1980s—a decade of de-industrialization which saw joblessness hit 12%.     

To soften the blow, European schools and nurseries must not slacken in their efforts to reopen. Solving the continent’s childcare conundrum would free up 10% of house-bound workers, experts estimate, boosting economic activity and blunting the threat of recession. 

Likewise, in an effort to dispel concerns of a second Covid-19 spike, contact tracing and mass testing regimes must be ramped up, giving staff the confidence to return to work.   

Yet, even with these measures, there seems little doubt that a tide of joblessness approaches. Europe’s stop-gap efforts have forestalled the coming storm—but on the horizon, dark economic clouds are gathering.



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