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After the great recession, the American economy rebounded faster and stronger than the euro zone.
But as both emerge from the first wave of the Covid-19 pandemic, the tables seem to have turned https://bloom.bg/30glA8P
But as both emerge from the first wave of the Covid-19 pandemic, the tables seem to have turned https://bloom.bg/30glA8P
The U.S. is still struggling to contain outbreaks in several states.
Meanwhile, in most European countries, sacrifices of months of strict lockdowns appear to be paying off with any flare-ups contained locally https://bloom.bg/30glA8P
Meanwhile, in most European countries, sacrifices of months of strict lockdowns appear to be paying off with any flare-ups contained locally https://bloom.bg/30glA8P
The euro zone is in the middle of a very steep recession, and GDP is expected to fall by nearly 8% in 2020.
But Europe’s restaurants, bars and shops don’t seem to be heading for a mass round of fresh lockdowns, unlike in the U.S. https://bloom.bg/30glA8P
But Europe’s restaurants, bars and shops don’t seem to be heading for a mass round of fresh lockdowns, unlike in the U.S. https://bloom.bg/30glA8P
The change in the euro zone’s and U.S.’s unemployment rate since the pandemic shows the difference of the two approaches:
3.5% in February to 11.1% in June
7.2% to 7.4% in May https://bloom.bg/30glA8P
3.5% in February to 11.1% in June 7.2% to 7.4% in May https://bloom.bg/30glA8P
So how has Europe kept job losses so low?
It’s down mostly to furlough schemes, which have covered more than 35 million people in the bloc’s five largest economies https://bloom.bg/30glA8P
It’s down mostly to furlough schemes, which have covered more than 35 million people in the bloc’s five largest economies https://bloom.bg/30glA8P
The schemes subsidize workers for the hours they’re not employed, meaning companies can keep workers on their payroll.
Without them, the drop of worker income across the euro area would have been 22% during lockdowns. Instead, it was only 7% https://bloom.bg/30glA8P
Without them, the drop of worker income across the euro area would have been 22% during lockdowns. Instead, it was only 7% https://bloom.bg/30glA8P
These furlough schemes aren’t without problems:
Expensive
Perverse incentives for workers
Hard to end
Employers may still need to adapt post-Covid by downsizing https://bloom.bg/30glA8P
ExpensivePerverse incentives for workersHard to endEmployers may still need to adapt post-Covid by downsizing https://bloom.bg/30glA8P
These problems don’t make furloughing a bad idea, but governments need to accompany them with active policies, such as retraining those who are likely to become unemployed https://bloom.bg/30glA8P
