By Philip Blenkinsop
BRUSSELS (Reuters) – Temporary unemployment schemes across Europe may find it hard to save jobs for leisure and travel workers facing a partial or prolonged recovery from the COVID-19 pandemic, even if they help industries that are recovering quickly.
Short-term unemployment or retirement plans have occupied a quarter of the British workforce, nearly two-thirds of employees in the French private sector and several million in Europe.
Defended by Germany, where it is known as kurzarbeit, schemes generally provide at least 80% of workers' compensation for which there is currently no work, but a quick return is expected after a limited period.
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Regimes spread faster and faster than during the last major shock, the global financial crisis of 2008-2009.
Raymond Torres, chief economist of the Spanish think tank Funcas, said that licensing is one of the responses that really worked in the initial handling of the crisis.
"I wish the same thing was done in 2009, where they were barely used and caused unemployment to rise," he said, although he was concerned that the plan in Spain will only last until the end of June, with many months of economic crisis. . expected.
The head of the Swiss pharmaceutical company. Novartis (He gave a worrying warning on Friday that any vaccine against the new coronavirus will not be ready for use for at least two years.
However, layoffs have a cost, so they are temporary in nature. In Italy, for example, companies can use them for up to 18 weeks. Many elsewhere last until the end of June.
UK Finance Minister Rishi Sunak said the UK bill to cover 7.5 million workers was £ 8 billion ($ 9.75 billion) a month, about two-thirds of that that the country will spend on your health services. Sunak warned that it is not sustainable, although it extended it for the second time on Tuesday.
Even with this scheme, the UK unemployment rate more than doubled to 10% in the second quarter.
In France, the cost is expected to far exceed the projected 26 trillion euros ($ 28.1 trillion). Labor Minister Muriel Penicaud said the government plans to cut state wage reimbursements starting in June.
PERMANENT CHANGES TO THE ECONOMY
A study published in Belgium this week gave an overview of economic life after the end of temporary layoffs. Belgium has around 900,000 people covered by this scheme, currently until the end of June.
The business survey conducted by the country's new economic task force showed that 180,000, or 6% of the workforce, were at risk of losing their jobs in a relatively short period of time.
A quarter of them worked in hotels, cafes and restaurants and almost half in the culture and leisure sector. Another 75,000 self-employed people think they are at risk of sinking.
Italy has banned the dismissal procedures until mid-August and the Minister of the Economy, Roberto Gualtieri, has repeatedly promised that no one will lose his job due to the coronavirus. However, this should not save the jobs of all freelance workers in the fixed-term service sector and those in the gray economy.
Temporary layoff schemes mean that companies are not faced with layoffs and possible rehiring costs. Workers are more inclined to keep spending and less concerned with saving, supporting the economy. Regular unemployment has the opposite effect.
Gregory Claeys, senior member of Bruegel's economic think tank, says temporary layoffs are working well for rebounding sectors of the economy, such as the resuming auto industry. However, the tourism or entertainment sectors do not seem ready for a V-shaped recovery. Temporary layoffs can only go so far, he said.
"If it is more than a year, other solutions are needed and other policies like retraining will be needed. It is good in a blockade, but it’s good ; there are more social changes, alternatives are needed. "
Irish Prime Minister Leo Varadkar has said that Ireland's wage subsidy program could target certain sectors.
The independent British think tank, Resolution Foundation, warned of the risk for workers in the hotel industry and recommended a differentiated phase-out for the sectors most affected by the closure.
Some industries, such as airlines, have already bitten the ball with a series of job losses at companies like Ryanair (I :), British Airways (L 🙂 and Air France-KLM (PA :).
However, governments also had to recognize that the post-COVID world may not be the same as the previous life, according to Roel Beetsma, professor at MN Pension Economics, University of Amsterdam.
"You also need to consider long-term sectoral changes. For airlines, people will come back, but maybe not to scale before. Retailing could see a permanent change in shops in line, "he said.
