The spread of the coronavirus is starting to take its toll on the job market. According to recent figures from the Organization for Economic Co-operation and Development (OECD), the unemployment rate is starting to soar in many developed countries. In the United States and Europe, jobless claims are increasing day by day and could accelerate further in the weeks to come. The shutdown of a large number of economic sectors to preserve the health of populations and employees has forced a very large number of companies to lower the curtain for several weeks.
For the States, this explosion of registrations augurs a complex period to manage in order to avoid an excessively violent social breakdown. The recession which is already hitting many economies is waking up the nightmare of queues following the Great Depression of 1929. At the time, the United States had recorded a massive rise in unemployment. Industrial production had halved from 1929 to 1932 and the unemployment rate had jumped from 3.1% to 24%. In March 1933, half of the country’s working population was unemployed, or fifteen million people. Even if the responses to the current crisis are often considered more appropriate than in the past, the collapse of activity and the colossal damage on the labor market could largely weigh on the countries’ recovery capacities.
In Florida, Americans wait in their vehicles to collect their forms and register for unemployment. Credits: Reuters.
Unemployment boom in the United States and Europe
The latest statistics across the Atlantic show an exponential increase in the number of job seekers. According to OECD data, the unemployment rate for the week ending March 14 increased by 0.9 percentage points to 4.4%. The youngest (16-24) were on the front line during this first period with a rate going from 7.7% to 10.3%. During the second half of March, the situation deteriorated further with more than 6.6 million people registered at the end of the month. Above all, some economists regularly remind that unemployment figures in the United States do not reflect the reality of the phenomenon. During a press briefing Thursday afternoon, the economist and president of the economic analysis council (CAE) Philippe Martin recalled that “One of the weak points of the American economy are the inequalities between States to respond to the health crisis and the deterioration of the labor market. There is no partial unemployment like in Europe. It is an increase without unemployment precedent “.
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The sudden and sudden increase in the number of unemployed could have disastrous consequences on the financial situation of American households. Indeed, if the American administration has strengthened the safety nets in recent weeks by proposing a flat-rate allowance of $ 600 per week, many self-employed workers who find themselves out of activity risk staying away from all these devices eligible for certain types of profiles. In addition to the loss of income, young people hit hard by the crisis could find themselves quickly isolated and with difficulties to find a job at the time of recovery.
In Europe, even if few statistics have yet been made public for the month of March, the first figures published also illustrate an increase in registrations. “In Austria, the number of people registered with the public employment service increased by more than two thirds in March. While in Norway the number of unemployed people registered in employment offices has increased fivefold ” specifies the press release of the OECD. In France, the latest figures from the Ministry of Labor point to a sharp increase in partial unemployment registrations. Thus, more than 6.9 million employees would be in this situation, a new record, out of nearly 20 million employees in the private sector. In total, 628,000 companies have used this device which allows the employee to be compensated up to 70% of gross salary and 84% of net salary.
A device extended to Europe
After weeks of divisions and battles, the finance ministers of the Eurogroup finally found an agreement Thursday evening for a rescue plan valued at 500 billion euros. In the panoply of measures presented, there is a device called Sure (for Support to mitigate Unemployment Risks in an Emergency) which aims to extend partial unemployment to all the countries of the European Union. Presented on April 2 by the European Commission, this mechanism provides for an envelope of 100 billion euros “in the form of loans to countries that need it so that workers can earn an income and that companies do not lay off workers. This instrument will enable citizens to continue to pay their rent, their bills and their food purchases and it will help provide stability essential to the economy. ” The partial unemployment scheme is generally supported by the economists interviewed in recent weeks. However, there again, many workers could remain excluded from the scheme, such as the self-employed, the liberal professions or the unemployed who have resigned.
On this last point, the French Ministry of Labor has indicated that it will soften the rules to facilitate registration and allocation requests for these atypical profiles. “It was a hole in the racket that was lifted from the field. Those who had resigned shortly before confinement, before March 17, and who had a promise to hire, on CDI, on CDD, found themselves often between two chairs and frankly penalized “, said the minister on RMC and BFMTV. Unemployed jobseekers should also be severely penalized by this recession which affects all of the French economic sectors. Finally, people who are counted in the unemployment halo could find themselves in even more perilous situations if the economic rebound is slow to come. In France, 1.6 million people are included in the unemployment halo.
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