A preliminary assessment of the impact of the COVID-19 pandemic on the euro area labour market

Vasco Botelho, Agostino Consolo and António Dias Da Silva

Economic Bulletin Boxes, 2020, vol. 5

Abstract: This box analyses labour market developments in the euro area since the onset of the coronavirus (COVID-19) pandemic, contrasting the developments in business and consumer survey data with the main headline labour market indicators for the euro area. On the one hand, business and consumer survey data point to a strong deterioration in the euro area labour market since the introduction of the containment measures to limit the spread of the virus. On the other hand, the extensive margin of the labour market has shown a muted response, with both employment and unemployment adjusting moderately to the COVID-19 shock. The adjustment of the euro area labour market is occurring instead via a strong decline in the average number of hours worked per employed person, shaped by the widespread use of short-time work schemes in the euro area. These schemes have been successful in containing dismissals, supporting incomes and helping firms to effectively reduce their payroll costs and liquidity needs, while maintaining the worker-job relationship. However, the continued success of the widespread use of short-term work schemes in supporting the euro area labour market depends critically on the dynamics and duration of the crisis. JEL Classification: E24, E65

Keywords: COVID-19 crisis; labour markets (search for similar items in EconPapers)
Date: 2020-07
Note: 3572376
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Citations: View citations in EconPapers (9)

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