At the height of the Corona epidemic, everyone was singing about the labor support measures adopted by the eurozone, because they succeeded in containing the effects of the epidemic on employment more than the United States and other economies, but it seems That would be a benefit in the near term only.
With the epidemic causing the layoffs of millions of workers as a result of the cessation of economic activity and the closure of factories and companies, Europe has given priority to protecting jobs during the current crisis through partial work plans that mean paying Governments have part of employee salaries ranging from 60% to 85% in exchange for non-layoffs and reducing their work time as part of the precautionary measures to combat the Corona virus.
In comparison, the United States took a different approach by focusing on providing unemployment benefits and increasing them by about $ 600 per week as well as sending checks directly to individuals to alleviate the repercussions of the crisis. In the US and Europe, strikingly different performance during the Corona period.
During the first three months at the height of the epidemic from February to April, the unemployment rate in the euro area rose only 10 basis points to 7.3%, while the slowdown jumped in The United States has 1,120 basis points to 14.7%, as the following chart shows in Pimco's analysis.
Despite the unprecedented shock to the economy and its contraction in the euro area, the euro by more than 12% during the second quarter of this year, the unemployment rate did not increase only slightly in the period of the epidemic .
But it appears that unemployment rates in the euro area are currently artificially low with slight increases for some time, and with partial action plans expiring (most of these plans are due to expire Eurozone between the end of the third quarter 2020 and the first quarter of 2021) it is expected that more people will search for work and structural changes take place in the European labor market.
According to Nicola May and Tiffany Wilding, in an analysis via Pimco, the success rate attributed to Europe in controlling the unemployment rate at the beginning of the crisis may reverse before the end of the year and this success will be directed to the states The United States despite the recognition that economic risks may be greater in the largest economy around the world.
The European Central Bank has also warned that the eurozone is likely to suffer from a sharp increase in unemployment this fall, even with the economic recovery from the Coronavirus pandemic, as major makers have expressed Politics in the central bank expressed their concerns that the labor market is lagging behind the rest of the economy.
And in the early signs of the unemployment crisis, the gap in the unemployment rate between Europe and the United States has narrowed since the height of the epidemic, as the unemployment rate in the United States fell to 8.4% during the month In the past, while the unemployment rate in the euro area rose slightly to 7.9% in July ...
