Academic Publication

Safeguarding Europe’s livelihoods: Mitigating the employment impact of COVID-19

Authors:
David Chinn
Julia Klier
Sebastian Stern
Sahil Tesfu
Source:
McKinsey and Company
Contributor:
Publication Year:
2020
  • SDG 3 - Good Health and Well-Being
  • SDG 5 - Gender Equality
  • SDG 8 - Decent Work and Economic Growth
  • SDG 9 - Industry, Innovation and Infrastructure

The COVID-19 pandemic has put tens of millions of jobs at risk. Examining the industries, occupations and demographics most in peril can help decision makers shape targeted and rapid responses.

After weeks of determined public-health efforts, Europe appears to have bought itself a much-needed moment of relief in the fight against COVID-19. Even in heavily affected countries such as Italy and Spain, infection rates have started to slow down, mostly because of the stringent lockdown measures enacted by governments. However, with the absolute numbers of infections and deaths still on the rise, and the grim economic consequences of lockdown and physical-distancing regulations slowly materializing, leaders still face the dual imperative of safeguarding lives and livelihoods.

The 2008–09 financial crisis provides a sobering analogy: it began as a financial shock but soon spilled over into the real economy. The COVID-19 pandemic, in turn, is a public-health crisis that is now beginning to take its toll on the real economy—primarily because the lockdown measures that were taken to protect lives have severe consequences for businesses and their employees. With economic activity in many sectors having ground to a near standstill, many businesses are struggling to uphold their financial obligations. And with uncertainty looming large, many companies are considering adjustments in their workforce. This could potentially put millions of jobs at risk through reductions in hours or pay, temporary furloughs, or permanent layoffs.

Our analysis, based on occupation-level data, estimates that the COVID-19 crisis could leave up to 59 million jobs at risk1 in Europe—a staggering 26 percent of total employment in the 27 member countries of the European Union (EU-27), plus the United Kingdom (EU-28). Naturally, the level of risk will vary greatly among occupations and industries, depending on whether they are system relevant or not, how closely they are performed in physical proximity to others, how much of the work can be done remotely through technology, and potential changes in demand as the crisis evolves.

Safeguarding jobs at risk in otherwise healthy, productive enterprises is imperative; losing those jobs would not only be a tragedy on an individual level but would also be very painful from an economic perspective. Every job has tangible economy-wide benefits as it supports consumption, saves on welfare spending, and avoids the adverse health effects that unemployment frequently brings. Europe must avoid the significant rise in unemployment witnessed during the 2008–09 financial crisis: the unemployment rate rose by 27 percent from 2008 to 2009 across the EU-28, and youth unemployment reached staggering heights, especially in some Southern European economies.2 Overall it took almost ten years for EU-28 labor markets to recover, with great variance among European countries, and countries such as Greece, Portugal, and Spain have not reached precrisis employment levels.3 As estimates of the expected economic shock created by the pandemic far outstrip that of the financial crisis, mastering this challenge will be even more important in the current context.

We hope that our analysis will help build the case for swift and forceful action, improve the understanding of which jobs and groups are particularly vulnerable, and provide new insights on what can be done to mitigate the potential negative fallout.

European business leaders and governments, as well as the European Commission, have already begun to take decisive action to respond to the employment challenge—but much remains to be done. We therefore also identify a set of potential steps that business leaders and governments can take now to minimize the number of jobs at risk and to sketch a path forward once lockdown regulations start lifting.

Share

Suggested Articles

Adolescents+2 more topics
📣 Calling all #youth in the #AsiaPacific Region and beyond! Our friends at Youth Co:Lab are hosting the hybrid #YouthCoLab Summit 2022 this summer July 4-7, 2022 🤩 This year's Summit aims to highlight, encourage and celebrate the role of young people in the #DecadeofAction, while showcasing and...
Contributor:
16 Likes