Coronavirus: McKinsey warns nearly 60 million jobs at risk in Europe

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2 min read
Empty streets in Leicester as the UK continues in lockdown to help curb the spread of the coronavirus. (Photo by Joe Giddens/PA Images via Getty Images)
Empty streets in Leicester as the UK continues in lockdown to help curb the spread of the coronavirus. (Joe Giddens/PA Images via Getty Images)

The economic fallout from the coronavirus pandemic threatens 59 million jobs across the European Union and the UK, according to a report from McKinsey.

The consultancy predicts that the unemployment rate across the EU could almost double by 2020 to 11.2% in a worst-case scenario where the pandemic would not be contained within three months. In this scenario, the unemployment rate would not return to current levels until 2024.

One in four jobs could be under threat, McKinsey notes, from either permanent redundancies, furloughs or reduced hours.

“Europe must avoid the significant rise in unemployment witnessed during the 2008-09 financial crisis, when the unemployment rate rose by 27 %,” McKinsey said in its report.

The sectors that are going to suffer the most in terms of job losses are those where employees have the most contact with other people, including sales and service roles, building jobs, and food services.

McKinsey called for governments and companies to take “swift and forceful action” to protect jobs. Companies, for example, need to look at implementing split shifts and remote working where possible.

READ MORE: Coronavirus: UK startups get £1.25bn COVID-19 support from government

Germany and other EU countries have already begun implementing short-term work schemes, where the government pays a percentage of a worker’s salary (in Germany it is about 60%) while they are temporarily laid-off. This scheme was pioneered by Germany during the financial crisis to avoid mass lay-offs and ensure that companies can quickly ramp up productivity without a lengthy re-hiring process.

The UK government’s job retention scheme allows employers to seek refunds for up to 80% of a furloughed worker’s salary (capped at £2,500 per month) to avoid making them redundant. It has extended the scheme until the end of June.

READ MORE: Coronavirus: Government job scheme opens with millions already furloughed

At an EU level, the European Commission earlier this month proposed a €100bn (£87bn, $109bn) short-time work initiative called SURE to help employers in economies badly hit by the pandemic, such as Spain and Italy, to avoid mass unemployment.

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