The role of public employment during the COVID-19 crisis

Employment growth in the public sector has played an important role in supporting total employment during the pandemic. Following the small decline in public sector employment and the trough in economic activity in the second quarter of 2020, public sector employment has contributed about 1 percentage point (1.5 million persons) to the cumulative total employment growth of about 4.2% (6.6 million persons). Most of the employment growth in the public sector is associated with the health and education sub-sectors. In both of these sub-sectors, activity has not only increased during the pandemic but has also shown a positive trend over time. Specifically, unlike during previous euro area crises, temporary employment in the public sector has risen during the coronavirus (COVID-19) crisis and remains above its underlying trend by about 300,000 persons (0.2% of the euro area labour force). This increase in temporary public sector employment is itself driven mostly by the education and health sub-sectors and is probably due in particular to the health measures associated with the COVID-19 pandemic. As the impact of the pandemic recedes, this increase could be partly reversed. JEL Classification: E24, J21