In the five largest European countries, 9 million employees or 20 percent those currently participating in short-time programs will face an increased risk of losing their jobs in 2021, according to economists Allianz and Euler Hermes. These jobs are called “zombies” or “ghosts” because they seem like normal employment prospects, but they still require state aid to avoid delayed mass unemployment.
“In Europe, unlike the US, widespread job preservation programs have helped prevent mass unemployment in the short term. Nearly a third of Europe’s workforce or 45 million jobs in the five largest economies currently benefit from national employment support programs“- experts Allianz and Euler Hermes begin their analysis.
Zombie workers in Europe – Euler Hermes analysis
In their view, the success of the German Kurzarbeit during the Great Financial Crisis certainly prompted many European governments to adopt short-time working arrangements to alleviate the Covid-19-related impact on labor markets.
As they indicate, companies could reduce employee hours, with the government covering a large portion of lost income (from 60% to 100%). Poland did the same. Despite the extraordinary support measures, economists Allianz and Euler Hermes expect, in 2020, 4.3 million additional unemployed in only the five largest European economies.
But it is not everything. Economists Allianz and Euler Hermes estimate that in the five largest European countries, 9 million employees or 20 percent currently participating in short-time programs will face an increased risk of losing jobs in 2021 due to moderate recovery in sectors as they call ‘late flowers’ (regards among others for the sectors: transport and storage, accommodation and catering services, art, entertainment and recreation, retail and wholesale trade as well as industry and construction).
They called them work places “zombies” (or “spectrum” – seemingly normal employment prospects) because they require an ad hoc policy to avoid delayed mass unemployment.
In fact, the ‘late flower’ sectors employ a round 115 million employees in EU27, representing 49% total employment. At the national level, the share of total employment in the “late flower” sectors ranges from 42%. in France up to 50% in Italy. The report reads that:
Taking advantage of the employment intensity by sector in relation to the added value, combined with the expectations for a recovery by sector in 2021, we stop at the proxy of “zombies” jobs for which Kurzarbeit programs can postpone job loss at best.
According to calculations, such “zombies” of work place equal 6 percent. total employment. Spectrum jobs are the most abundant in the United Kingdom, as well as in Italy and Spain – because these countries have a relatively higher share of labor intensive sectors such as construction, retail and accommodation and catering services – and smaller in Germany.
Danger on the labor market
According to one of the issues that decision makers will have to solve, there is a risk that seemingly stable jobs will concern some of the employees who remained in the “late flower” sectors due to the income protection that public aid programs gave them, instead of moving to the ‘fast flower’ sectors (such as health and IT) with better job opportunities in an asymmetrical economic recovery.
– In this context, the combination of active labor market policies (raising qualifications, brokering) with wage subsidies is both urgent and important. Complementary programs aimed at subsidizing new jobs (especially for younger people, due to lack of experience more at risk of failure in the transition from school to work), employees choosing mobility and retraining, and people starting their own business, should also be continued to reduce the risk of deferred unemployment, they argue.
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