The coronavirus pandemic has wiped out nearly half of the 12 million euro-area jobs created in the seven years since the last recession, in another sign of the enormous damage wreaked on the economy.
Employment slumped by 4.9 million in first half of the year, almost all in the second quarter when the most stringent measures to contain the spread of the virus were in place.
More declines are likely. Generous furlough programs across the 19-nation bloc have so far contained the fallout on the labour market from a record economic contraction, with a rise in unemployment that is more modest than in the US.
Governments are now facing tough choices on how to wind down those programs though, as they weigh ballooning debt against the consequences of massive job losses for the economy.
Even the possibility of lost wages can cause consumers to increase their savings, undermining the recovery. The European Central Bank predicts an increase in joblessness as not all people in short-time work schemes or temporary layoffs will return to their previous posts.
In the US, with a similar population to the eurozone, employment is down more by than 12 million since the end of 2019.
The UK reported last week that payrolls have plunged by more than 700,000 since March. Chancellor of the Exchequer Rishi Sunak is planning to gradually phase out wage support there – though pressure is mounting to extend it – after spending £35bn (€38.73bn) on the programs so far.
With the virus disrupting global travel, airlines are among the companies planning the most wide-ranging job cuts. Deutsche Lufthansa AG has set a goal of slashing 22,000 full-time positions and warned that compulsory dismissals are likely. Air France-KLM is planning thousands of job cuts to secure government aid. German electronics retailer Ceconomy AG on Thursday announced plans to cut 3,500 jobs. A survey by the Ifo Institute showed this week that companies in Europe’s largest economy don’t expect business to normalize for another 11 months on average.
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