COVID-19 and the Europen Labor Market-5 Aspects You Should Know About
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By Wiktoria Nadolna, 7 minutes.
The Covid-19 pandemic has been present for over a year now, and as much as it merged into being a part of everyday life, economies of countries across the globe are continuously facing shocks and do not seem to get the situation under control. One of the most impacted areas is the labor market. In this article, I am going to talk about the fundamental challenges the EU labor market is facing nowadays, the groups of workers most influenced by it, as well as why some countries deal with this shock better than others.
One of the first things that come to mind when thinking of the pandemic is restrictions. Confinement measures are being implemented across the Member States to fight the spread of the novel virus in order to ensure public safety, as well as minimize possible negative outcomes in the economic and social sphere. However, besides serving their greater purpose, those measures are obstacles making everyday life more difficult. They have severe economic consequences, with the labor market being among the most influenced. Confinement measures differ across states and depend on stages of the pandemic, but they range anywhere from closing down non-essential shops and service points to restricting freedom of border crossing and requirements upon participating in certain events. In this article, I will discuss five aspects that should be kept in mind, while analyzing the current EU-labor market situation and what they can mean for an average student.
(1) Job Retention
One of the most widely applied measures has been closing down the service-offering business and non-essential stores. Those mostly being targeted by the regulations are businesses that require human contact and where distancing can be hard to implement. Enterprises that are the most vulnerable in this context are:
Source: Wiktoria Nadolna
In the Netherlands alone there are around 15,000 restaurants, all of which had to close down or limit their operational activity to take-away services. As a result of that, many businesses had to implement cost-cutting measures, most often meaning reducing the number of employees. According to the European Commission, such job losses target mostly people in an unfavorable condition which means being employed on a flexible contract or being self-employed. As a result, that pandemic is hitting the hardest in the economically most vulnerable group, including students. Across the EU, students are employed on such flexible contracts, making them the first-row group to be hurt by the pandemic in the labor market.
Countries across the world have created budget-drilling plans to retain employment in the most affected sectors, by providing subsidies for businesses and unemployment benefits as well as, in some cases, substitute employment. Unfortunately, often those aids are not enough, and being aware of not seeing the end of the pandemic anywhere on the horizon, each wave is going to be more and more devastating for businesses, national budgets, and regular people.
(2) Flexible Contract Workers
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As mentioned in the section above, while introducing cost-cutting schemes, employers have to obey by firing regulations of their country, and the most accessible solution is dismissing workers hired on a flexible contract (also called a zero-hour contract, student contract, commission/project contract). It allows the employer to cancel their cooperation almost instantly and often does not require any previous agreements. Most student jobs around the EU are regulated by such contracts, which means that students do get full flexibility but also puts them in danger of losing a job quickly in an event such as a pandemic that makes the employers cut operational costs. Furthermore, in most cases, there is also no leave support/compensation, driving people to the job market without a warning, where they face a very difficult situation. Finding another job can be on the verge of impossible, considering the crisis economies are facing around the world due to the pandemic. It should be taken with caution, and a lesson should be learned from that for the future. The importance of stable, well-regulated employment must be underlined, in order to prevent such situations in the future and prevent unemployment, from rising so dynamically in the event of a crisis.
(3) The World Moves Online
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The pandemic has forced any possible aspect of businesses and service-providers into the online sphere, to sustain the supply delivered to the market. Corporations around the globe have switched into work-from-home mode. Thereby, companies were able to keep their employees safe, but also reduce some of the fixed costs, coming from upkeeping offices and on-the-spot operations. It has allowed for companies to upkeep their operations and as a result, keep their revenues and their employees. However, there are two sides to every coin. Businesses that had to close their on-the-spot offices are not able to operate, and their customers move into e-commerce or e-business alternatives. As a result, even after the end of the pandemic, customers may never return to those, often small, businesses. This results in large-scale e-commerce booming, but at the expense of non-chain, small or family-owned businesses, that were not able to make the online transition, or did not make it in time. However, this is a chance in the labor market for young people, who are well acquainted with the internet and technology. Furthermore, it allows for working from anywhere in the world, increasing the labor market for young people tremendously.
(4) Border-area Employees
A different aspect of the labor market we have to consider is revolving around the EU internal market being based on the free flow of workers, goods, and services. That is possible thanks to the European Union and the Schengen Agreement. However, upon the COVID crisis, many governments impose restrictions upon entry, including workers. Thousands of people in the EU live in border regions, often working and living on the opposite sides of the border. Amid border crossings being controlled, and testing/quarantine regulations being imposed, it is nearly impossible to upkeep the living arrangements like that. Some countries have decided to extend an olive branch to people in such situations. Germany, for example, offered Polish workers who wish to stay to help in finding and paying for accommodation in Germany, as well as supporting their families, so that they can sustain the employability of Polish workers in the border area. However, in the majority of cases, border-area employees have been left with no help or guidance, facing a difficult choice of quitting a job, getting tested regularly (which can be very expensive), or leaving their families and home, in order to keep their jobs.
(5) Seasonal Workers
Seasonal work is a form of temporary employment linked to specific periods of the year and sectors (for example, fruit pickers in the agricultural sector) or the tourist industry (for example, cleaners in holiday resorts). Although the situation differs from country to country, seasonal workers are often treated less favorably than permanent workers.
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Many sectors, such as agriculture, rely on the seasonal labor force. Those workers often come from the poorer countries of the European Union, as well as from outside its borders. Seasonal workers ensure the proper functioning of the supply chain in some of the most fundamental sectors, such as food production. Rich countries with high average education levels face a scarce supply of workers willing to work in such labor-intensive professions, especially underlining the fact that they often guarantee fewer privileges than regular work contracts and are additionally poorly paid.
Employers in such sectors rely heavily on the supply of seasonal workers, which has been interrupted by the Covid-19 restrictions, in particular travel bans. European Institutions, in particular the European Commission, have already taken steps to ensure the admissibility of such persons to the country of their employment. However, there still remain many problems to tackle. Ensuring the flow of seasonal workers is essential not only for unemployment reduction, but also for the production capabilities of sectors relying on it.
All things considered, the Covid-19 pandemic is a crisis the modern European labor market has never faced before. With its challenges and tragic implications, it is a lesson for the governments and all of us on what matters should be resolved, in order to ensure the proper functioning of the internal market in case of another emergency. Certainly, conclusions will be drawn from the obstacles that occurred, and eventually, they will serve as a point of improvement for EU internal market policy, as well as national labor protection.