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McKinsey Report: Covid-19 Lockdown to Take Toll on EU Jobs, Salaries
Posted On 23 Apr 2020
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The coronavirus (Covid-19) pandemic, that has led to lockdowns Europe-wide, is now posing a serious risk to private sector employment and workers’ rights with a McKinsey report forecasting that 25 percent of the EU’s workforce – nearly 60 million people – are at risk of being laid off or suffering pay cuts.
According to the report, carried out by the McKinsey Global Institute (MGI), the coronavirus health crisis may double the EU’s unemployment rate to 11.2 percent in the coming months, with those keeping their jobs facing cuts in hours or pay, temporary suspension or permanent lay-offs.
If this happens, McKinsey analysts note that the EU unemployment rate will unlikely return to pre-crisis levels before 2024.
It should be reminded that heavily impacted by the 2008-2009 economic crisis, Europe’s labor market took a decade to bounce back, with Greece, Spain and Portugal still heavily exposed with the onset of Covid-19 as they had not achieved pre-crisis levels of employment yet.
At the same time, these countries – and hard-hit Italy – are all highly dependent on tourism, which is made up mostly of small and medium-sized enterprises. Nearly two-thirds of jobs at risk in the EU are in small and medium-sized enterprises.
Indicatively, MGI analysts estimate that some 8.4 million jobs in the hospitality and F&B sector are at risk – accounting for 74 percent of the total, with 44 percent or 16.4 million jobs in the wholesale and retail sector.
At the same time, half of the jobs in the arts and entertainment sector, or 1.7 million, are also under threat.
In the meantime, approximately 80 percent of employees at risk of being laid off do not have a university education and are younger with those under 24 almost twice as likely to be in jobs impacted by the coronavirus crisis against 25- to 54-year-olds.
According to the World Travel & Tourism Council (WTTC), up to 75 million jobs are at immediate risk in global travel and tourism due to the coronavirus pandemic.
