Unemployment in Europe could nearly double in the coming months, with up to 59 million jobs at risk from permanent cutbacks as well as reductions in pay and hours because of the coronavirus pandemic, estimates from consultancy McKinsey said.
The consulting firm estimated unemployment levels in the 27-member state bloc peaking at 7.6% in 2020 and a return to pre-crisis levels in Q4 2021. But in a worst-case scenario, unemployment could peak in 2021 at 11.2%, with a recovery to 2019 levels by 2024.
Eurozone unemployment fell to a 12-year low in February, the month before coronavirus containment measures began to be introduced widely across Europe. The jobless rate was 7.3% in the 19 countries sharing the eurozone, the lowest level since March 2008.
McKinsey said that the levels of impact would vary between demographic groups and industry sectors.
“Losing those jobs would not only be a tragedy on an individual level, but would also be very painful from an economic perspective,” McKinsey said in its report.
The study highlighted a close link between level of education and the short-term risk for jobs, “potentially exacerbating existing social inequalities.”
Half of all jobs at risk are in customer service and sales, food service and builder occupations. In Europe’s wholesale and retail sector, 14.6 million jobs could be threatened, 8.4 million jobs in accommodation and food and 1.7 million in arts and entertainment.
The European Commission, the bloc’s executive, proposed earlier this month a wage-subsidy scheme to encourage employers to cut workers’ hours rather than their jobs, a plan that could be worth €100 billion in borrowing guaranteed by all EU countries.
The Commission expects the EU to go into a deep recession this year because of the coronavirus outbreak, which has slowed economic activity to a crawl across the 27 members states.