Friday, August 14, 2020

Unemployment in Europe: which countries are suffering the most from the coronavirus crisis?

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With the coronavirus crisis, each day sees bad news emerge on the employment front. Closure of a factory of 3000 workers in Barcelona at Nissan, industrial sites on the side of Renault, partial unemployment imposed by the German giant Daimler … The Old Continent sees its number of unemployed increase inexorably when other indicators such as consumption (in bern), investment (in decline) and exports (slowed down), do not give more reason to hope. With the epidemic, all engines of growth are at a standstill.

If the unemployment rate reaches 7.8% in the euro zone according to Eurostat data, the statistical office of the European Union, published Thursday, it hides strong disparities. Also, according to Mathieu Plane, economist at OFCE and teacher at Sciences Po Paris, “these figures should be taken with great caution, because they do not reflect the unprecedented economic shock that we are experiencing”. The data studied are within the meaning of the ILO (International Labor Office). They take into account common criteria to allow comparisons between countries.

Among them, the fact “of being available to take a job within fifteen days” and that of “having actively sought a job the previous month or having found one which begins in less than three months”. Containment during the epidemic, child custody or the fact of being a vulnerable person, makes it difficult to meet these criteria. Thus, for France, while the number of unemployed rises to more than 4 million in category A, according to Pôle Emploi, they are “only” 2.3 million for Eurostat (7.7%).

Southern countries in the front line

This unprecedented crisis experienced by Europe in 2020 will reinforce the inequalities between Northern and Southern Europe. Italy and Spain are indeed the main collateral victims of the epidemic. Already affected by the crisis of 2008 and that of sovereign debts of 2012, the duo risks sinking a little deeper into a terrible recession. Highly indebted, these two territories do not have budgetary room for maneuver equal to the crisis.

Spain saw the largest increase between March and June, with its unemployment rate rising from 14.5% to 15.6%. As for Rome, its rate evolves from 8.4% to 8.8%.

For Mathieu Plane, this shock can be explained first by the drastic measures taken during the confinement period. “There is a fairly clear correlation between the intensity of the confinement and the fall in economic activity.” Italy, hit hard by the health crisis before France, was paralyzed first. Spain and France are not left out because of another criterion: sectoral specialization. “France, between the flagship of aeronautics and the tourism sector, has been particularly affected by the crisis”, comments the economist.

This specialization in services had protected France during the previous crisis of 2009, compared to the industrial giant that is Germany. Half of Germany’s GDP depends on its exports, while that of Paris relies more on its domestic economy. “What preserved us from previous shocks is exactly what is most affected today by the effects of the epidemic,” underlines Mathieu Plane. Madrid, too, is shaking with the collapse of tourism. This sector is, each year, its goose that lays golden eggs, providing more than 12% of its GDP and 13% of its direct jobs.

Northern and central Europe is not spared

The setback is less devastating in the North, but remains significant. In Germany, the unemployment rate rose from 3.8% to 4.2% between March and June. The country suffered in the second quarter of 2020 a historic decline of 10.1% of its GDP, announced Thursday the Federal Statistics Office, Destatis. This is “the indicator’s worst decline since the start of quarterly GDP measurements in Germany in 1970,” according to the institute. In the Scandinavian countries, in three months, the number of unemployed has also increased rapidly (Sweden, + 2 points, Finland, + 1 point, and Denmark + 1 point).

“Young people are overexposed”

The recession permanently penalizes young people entering the labor market. For those under 25 in the euro zone, the unemployment rate rose from 15.3% to 17% between March and June, an increase of 1.7 points. In France, it is double. The increase in youth unemployment stands at 3 points, from 18.4% in March to 21.2% in June. It is even worse in Portugal: with an increase of more than 7 points, youth unemployment reached 25.6% in the space of three months. In Italy, the rate is also soaring, reaching 40% in June 2020 against 34% in March.

Unemployment in Europe: which countries are suffering the most from the coronavirus crisis?

“Young people are overexposed to the risk of unemployment because of the precariousness of their contract,” notes Mathieu Plane. At the end of the exceptional period of short-time working, the adjustment variables will be short contracts and temporary workers. They will not be renewed. In France, the aid plan for young people presented by the government in June aims to help this generation to integrate into the labor market, in particular through hiring bonuses and integration contracts. .

But the employment crisis is only in its infancy, nuance the economist: “We risk seeing the re-entry of social plans, and layoffs will extend to many sectors. “

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