The COVID-19 pandemic has created severe tension, not only in health care, but also in economy, in volumes estimated to be the largest in the world since World War II. Unlike the financial turmoil of ten years ago, this time European governments have launched an unprecedented number of support campaigns aimed at protecting citizens from losing their jobs and income due to the pandemic, reported Latvian Radio on June 30.
Downtime benefits, job subsidies and other tools are being implemented are placed on the job. Whether it will help to override the pit in the economy, only time will show.
Accurate data on labor market developments in Europe are currently collected for the first quarter of the year. It should be remembered that this is a time when all the countries in Europe had not been affected by the pandemic, and while in some the virus was already raging with full force, others were still living normal daily lives. However, these first data also show that support measures introduced at very early stages to save jobs have contributed because employment has fallen far less than the gross domestic product of European countries (GDP).
Data compiled by Eurostat shows that the GDP of the European Union (EU) Member States has fallen by 3.2% in the first quarter compared to the previous quarter, while the number of people employed in the EU has fallen by just 0.1%.
Eurostat compiled more recent data on unemployment in EU Member States in April. The highest unemployment rate among EU Member States was in Spain – 14.8% in April, with 9% followed by Latvia. Then Cyprus – 8.9%, France – 8.7%, Lithuania – 8.6%. The EU’s average unemployment rate, on a seasonally adjusted basis, increased to 6.6% in April compared with 6.4% in March. Eurostat estimates show there were 14,079 million people in the bloc without work in April. Compared to March, the number of unemployed people increased by 397 000.
The same Eurostat data shows that in the first quarter, the average level of job vacancies in Latvia was slightly higher than in the European Union and the euro area, expressed as a percentage of the total number of vacancies available against all jobs in the economy – already occupied and vacant. In Latvia, the vacancy rate was 2% in the first quarter. In both the EU and the euro area, the average vacancy rate was 1.9% in the first quarter.
The fact that there are vacancies does not necessarily mean an opportunity to work. There are professions whose representatives can relatively successfully “migrate” between different sectors and businesses. But there are also areas where we will have to wait for action to recover. For example, this applies to aviation, which literally remained “on the ground” during the pandemic. Therefore, large redundancies occurred not only in Latvia’s airBaltic, but in almost all European airlines.
Accordingly, aircraft crews and other aviation workers, unless they are prepared to radically change their business, will have to wait for flights to recover gradually.
The same applies to cultural workers and other employees in the more heavily affected sectors of the pandemic.
However, experts say that developments in the labor market are currently one of the most difficult to predict after the pandemic, because very much will depend on governments’ decisions on support measures. One thing is clear: the trend of pay increases seen in recent years will have to say good-bye for some time.
If Latvia was one of the most heavily affected European countries during the previous crisis, it is now more likely to be the other way around. Jobs have also been lost in large European economies and in some even a much higher proportion than in Latvia. Therefore, the possibility of finding a job in the UK, Germany or France will at present depend more on the individual skills of the sector and the employee.
“It is unemployment and social issues that will be very difficult for many countries to address. Downtime compensations are the right tool to depreciate short-term problems. But in the long term, if companies fail to employ as many people as they did before, it will no longer help. Therefore, I forecast that the movement of the labor force would be significantly smaller. Moreover, we also see many sectors where business owners are increasingly inclined to implement automated solutions to replace workforce,” Guntars Krols, partner of the audit company “EY” in the Baltic States, said to news agency LETA in an interview.