“If the new jobs are going to be in a different area to where the old jobs were, it doesn’t make so much sense from a policy perspective to be supporting jobs that won’t be sustainable,” according to Brian Coulton, chief economist at Fitch Ratings in London.įor now, data show that vacancies across many sectors in Europe are outpacing demand for jobs, signaling that such concerns aren’t materializing. Furloughs may not have provided enough incentives for people to re-skill. Many southern countries, for instance, have a strong reliance on tourism, an industry still blighted by the pandemic. recover from the coronavirus pandemic.Įven if Europe’s approach has its merits, many economists caution that it’s too soon to tell whether safety nets there hindered necessary structural economic shifts. Here’s a closer look at what to watch out for as labor markets in Europe and the U.S. Although those benefits were expanded during the pandemic, quickly distributing aid to the millions who needed it proved extremely challenging.
While roughly half of American states have a program similar to Germany’s Kurzarbeit, their scope is limited, and many businesses don’t know they exist. and Europe have long been structurally different. “You’re stabilizing companies and helping them hold on to workers so they don’t have to deal with the frictions of the job market,” he said. “The fiscal costs of letting people lose their jobs, which means less revenue from income tax or supporting them through furlough schemes, is comparable,” said Achim Wambach, president of Germany’s ZEW institute, one of the country’s leading economic research organizations. That figure includes the jobless aid programs created at the start of the pandemic, such as the one for those not traditionally eligible for assistance including self-employed workers. states paid out about $790 billion across regular unemployment insurance and federal benefits in the 17 months through July 2021-or about 3.7% of U.S. Figure for Italy was calculated by Bloomberg News (more information on our methodology note.) Note: Totals are the most recent available for each country.
In the U.K., for example, unemployment is now expected to peak at around 5%, compared with fears of more than 12% at the start of the pandemic.
“Most of the evidence we have is that increasing labor-market churn is harmful to people’s well-being.”Įurope’s crisis approach meant that its five largest economies-Germany, U.K., France, Italy and Spain-supported as many as 32 million jobs through furlough schemes in April 2020, a figure that has tapered off to about 4 million in the latest data available. Those economies have maintained productive capacity underpinning a strong recovery.
“I would bet the European approach was much better,” said Adam Posen, president of the Peterson Institute for International Economics, a Washington-based think tank. Nonetheless, Italy's larger service sector has been far more fragile and Italian gross domestic product growth continues to lag that of most of its euro zone peers.įirst quarter GDP edged up 0.1% from the previous three months, ISTAT reported last month, revising up a preliminary estimate of a 0.2% decline.Judgments on the success of such highly contrasting policies may well provide blueprints for the advanced world’s fiscal responses to future economic emergencies at a time when efforts to turn the tide on widening inequality have become a priority for governments. That compares with a rise of 0.8% in Spain and falls of 5.4% in France and of 7.3% in Germany. Italy's industrial production is up 4.8% compared with February 2020, the last month before the COVID-19 pandemic hit Europe, Intesa Sanpaolo said. On a work-day adjusted year-on-year basis, output was up 4.2% in April, national statistics bureau ISTAT reported, while the February-to-April period saw a rise of 2.0% compared with the three months to January. "It seems to be hit less hard than the other large euro zone countries by the difficulties in acquiring raw materials and components, probably due to lower reliance on Eastern Europe and Asia for its supply chain," he added. "Italian manufacturing is proving more resilient than expected in the face of the war and the inflationary shock," said Intesa Sanpaolo economist Paolo Mameli.