Focus on saving jobs in Europe as business vaporises
AS THE new coronavirus spreads across Europe, ravaging economies and killing thousands, governments and the European Union, EU, are focusing much of their economic rescue efforts on containing a boom in joblessness, particularly by helping companies not fire workers.
By one count, at least one million Europeans lost their jobs over the past two weeks as the continent entered a lockdown, with schools, businesses and social gatherings shut down, effectively freezing large parts of the economy.
While the rise in unemployment is devastating and is likely to turn out higher than that, it is still far below that of the United States, where nearly 10 million people applied for jobless benefits in two weeks. The contrast highlights Europe’s greater social safety nets, in particular schemes where governments help companies put workers on shorter hours instead of firing them – in the hope of bringing them back quickly once the pandemic fades.
“In this coronavirus crisis, only the strongest of responses will do,” European Commission President Ursula von der Leyen said Thursday as she unveiled a €100-billion (US$110-billion) EU plan to help companies to not fire employees.
“With a new solidarity instrument, we will mobilise €100 billion to keep people in jobs and businesses running. With this, we are joining forces with member states to save lives and protect livelihoods.”
Even before lockdown measures were extended across almost all of Europe, the economy was expected to fall into recession because of the virus. To weather the downturn, governments have unveiled trillions of euros in credit for companies and aid for small businesses and families, including cash handouts. The EU Commission, its executive body, made available €37 billion from the EU budget, and the European Central Bank said it will buy as much as €750 billion in financial assets to calm markets.
With her new lending tool, Von der Leyen wants to ensure skilled workers are kept by their companies until “the moment the economy picks up again”.
It would help fund schemes that have already been put in place in many countries to avoid lay-offs.
According to the European Trade Union Confederation, some 18 EU countries as well as Norway and the United Kingdom have already introduced jobs-protecting measures.
France is spending €11 billion on a scheme to keep people in partial employment. Germany has a programme that fills in lost wages when companies must put workers on shorter hours due to an interruption that is temporary and beyond their control, which can be up to 100 per cent of their work time. The programme pays 60 per cent of employees’ lost net pay, and 67 per cent for those with children.
Many companies have labour agreements under which they can bring workers even closer to full salary. The German scheme helped limit unemployment in the 2009 recession, when companies put some 1.5 million workers in the programme. About 2.35 million workers are expected to make use of it during the current crisis.