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

Author

Listed:
  • Botelho, Vasco
  • Consolo, Agostino
  • Da Silva, António Dias

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

Suggested Citation

  • Botelho, Vasco & Consolo, Agostino & Da Silva, António Dias, 2020. "A preliminary assessment of the impact of the COVID-19 pandemic on the euro area labour market," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2020:0005:5
    Note: 3572376
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    Citations

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    Cited by:

    1. Mussida, Chiara & Zanin, Luca, 2023. "Asymmetry and (in-)stability of Okun’s coefficients in nine European countries," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).
    2. Lalinsky, Tibor & Pál, Rozália, 2022. "Distribution of COVID-19 government support and its consequences for firm liquidity and solvency," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 305-335.
    3. Blagov, Boris & Grozea-Helmenstein, Daniela & Jäger, Philipp & Micheli, Martin & Weyerstrass, Klaus, 2020. "Die wirtschaftliche Entwicklung im Ausland: Weltwirtschaft erholt sich von historischem Einbruch," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 71(3), pages 5-36.
    4. Julien Albertini & Xavier Fairise & Arthur Poirier & Anthony Terriau, 2022. "Short-Time Work Policies During the Covid-19 Pandemic," Annals of Economics and Statistics, GENES, issue 146, pages 123-172.
    5. Tavares, Aida Isabel, 2021. "Working more and less hours, profiling old European workers during first wave of COVID-19 pandemic, evidence from SHARE data," MPRA Paper 111263, University Library of Munich, Germany.
    6. Gómez, Ángel Luis & Lattanzio, Salvatore, 2024. "Worker reallocation in Italy and Spain after the COVID-19 pandemic," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(1).
    7. Lalinsky, Tibor & Pál, Rozália, 2021. "Efficiency and effectiveness of the COVID-19 government support: Evidence from firm-level data," EIB Working Papers 2021/06, European Investment Bank (EIB).

    More about this item

    Keywords

    COVID-19 crisis; labour markets;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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