EU Lost 5.5 Million Jobs In Second Quarter, Prepares For Worse Cuts As Furlough Programs Expire

The European Union lost a record 5.5 million jobs in the second quarter as the number of employed people dropped by 2.6% across the bloc.

Eurostat, the statistical arm of the European Commission, said the 2.6% decline in jobs was accompanied by the bloc’s 11.7% decline in gross domestic product.

“These were by far the sharpest declines observed since [recordkeeping] started in 1995,” Eurostat observed, noting in the first quarter of 2020, employment slipped by only 0.1% in the EU.

As of the end of the first quarter, some 209.1 million people were employed in the EU.

The Financial Times noted the Eurostat data did not include the millions of European workers who have been placed on government-supported furlough and wage subsidy schemes.

“Whilst we are [now] seeing a rebound in [economic] activity, it is clear it will be a slow and fragmented process as consumers still remain in a state of nervous exhaustion with the effects of the pandemic and potential lockdown reimpositions,” said Charles Hepworth, investment director at GAM Investments in Zurich.

Airline companies have aggressively cut jobs in the wake of pandemic-related travel disruptions. Lufthansa of Germany plans to cut 22,000 jobs while Air France-KLM also will slash thousands of jobs, despite receiving government financial assistance.

On Thursday, German electronics retailer Ceconomy AG said it planned to cut 3,500 jobs.

Bloomberg reported in the euro zone – which comprises 19 of the 27 member states of the EU – almost half of the jobs created since the Great Recession of 2008-09 have now been wiped out by the effects of the COVID-19 pandemic.

As furlough and wage subsidy programs are slated to expire, more job losses are likely across the continent.

“European governments have bet vast sums on a swift economic recovery drawing furloughed employees back to work,” said Jamie Rush, an economist at Bloomberg. “The latest data show that progress is slowing, raising the prospect of mass layoffs in the second half of the year.”

The New York Times reported that millions of part-time and self-employed workers in Europe do not benefit from furlough programs as they do not qualify.

“It’s people like us who are falling through the cracks -- and we are many,” said Thierry Hombert, a 50-year-old caterer in Paris. “We’re the ones being left behind.”

Hombert’s jobless benefits – which pay him less than half of normal income – expire in mid-August.

“COVID-19 has created a huge financial crisis,” Hombert said. “You try to plan two months out, but you can’t even do that. Then you find yourself having to sell the apartment to get by.”

Enrico Bergamini of Bruegel, a Brussels think tank, said government measures have left millions of people on the continent unprotected.

“The issue will be, how do we recover from this shock, which is widening inequality gaps,” Bergamini said. “Workers are unprotected and vulnerable because we let them be.”