HOW MUCH WILL THE VIRUS INFECT THE LABOUR MARKET?

The COVID-19 crisis is an unprecedented shock to European labour markets, raising fears of a n even greater deterioration than that which followed the Great Recession. Since 2013, the return to growth in the Eurozone has been accompanied by a significant fall in the unemployment rate, from 12% to 7.6% in 2019. However, the current quarantine measures have put pressure on national labour markets. They have disrupted economic activity by forcing a shutdown in many areas . The direct consequence of this is a drop in the hours worked, but also cash flow problems for companies and the risk of bankruptcies. We can therefore expect an increase in the number of unemployed i n the short term, and a slowdown in the number of jobs created in the medium term. Some sectors are likely to be significantly impacted, notably hotels, restaurants, trade and the airline industry. Accordingly, some categories of workers could quickly lose their jobs: fixed-term contracts, part-time work, etc. Euro area Member States have implemented emergency measures to preserve companies’ cash situation and to directly support employment and income (exemption from contributions, short-time working benefits, etc.). At the European level, a guarantee mechanism (SURE plan) has also been decided upon to enable the European Commission to lend Member States up to €100 billion to finance short-time working scheme . The European employment preservation plan has a twofold objective: to avoid putting a strain on Member States’ public finances in the event of a surge in spending on unemployment benefits and to facilitate economic recovery as much as possible. N evertheless it is certain that this crisis will have a negative impact on the labour market. How much will crucially depend on the duration of the confinement measures and the extent of the emergency measures and recovery plans implemented. In this paper we aim to provide an overview of the effects in terms of unemployment and employment in the four main Euro area countries .