PARIS – At BP 10,000 jobs. By Lufthansa 22,000. By Renault, 14,600.
When European countries ordered companies to close and workers to stay home when the coronavirus spread, governments took radical steps to protect workers from the prospect of mass unemployment, spending billions on companies to keep people in work.
The dismissals are coming anyway.
A tsunami of job cuts is about to hit Europe as companies prepare for dull downsizing plans to offset a column in business from the outbreak. Regulatory support furlough schemes that have helped keep about a third of Europe’s workforce financially secure will relax in the coming months.
About 59 million jobs are at risk of cuts in hours such as wages, temporary furloughs, or permanent layoffs, particularly in industries such as transportation and retail, according to a study by McKinsey & Company.
Governments are warning that millions will lose short-term pay, and the European Central Bank said last week that unemployment is likely to rise and remain high, even if a recovery from the pandemic is lacking.
“Europe has succeeded in mitigating the initial effects of the crisis,” said John Hurley, senior research manager at Eurofound, the research arm of the European Union. “But in all likelihood, unemployment will come home to eradicate, especially as the generous furlough programs begin to decline,” he said.
“There will be a shakeout,” he added, “and it will be pretty fun.”
Compared to the United States, which lost more than 20 million jobs in April alone, furlough programs in the European Union have prevented unemployment from falling off the charts. Germany, France, Denmark and the United Kingdom are among the countries that have implemented so-called short-term schemes, which effectively nationalize payment codes. of about 60 million employees in the private sector.
But even before a recent recurrence of coronavirus cases, the economic damage of the pandemic grew, and it now appears that expensive government programs have only eased the pain for some workers. Corporate giants and retail companies that have been operating well below capacity since the onset of the crisis will now turn to fill tens of thousands of positions in the fall and through next year. Some companies think the disruption is the best time to move forward on long-term downsizing.
Airbus, BP, Renault, Lufthansa, Air France, the Debenhams chain, Bank of Ireland, the retailer WH Smith and even McLaren Group, which includes the Formula One racing team, along with countless smaller companies, are among the planning cuts that will sweep factory workers, retail workers and high-paid workers into the ranks of the unemployed.
The decline is increasing, even as Europe shows signs of recovery amid a historic contraction in growth. In Germany, business and consumer confidence are growing, while manufacturing activity throughout the eurozone jumped back to growth in July. The euro strengthens against the dollar as investment in Europe flows.
But the pandemic, and new outbreaks in Germany, France and other countries, have created greater uncertainty in industries that are being transformed by staying at home and changing consumer habits.
“Managers realize that the damage will last much longer than you can survive on government-supported programs, so they are now restructuring,” said Sebastian Stern, a senior partner at McKinsey in Germany and a co-author of the pandemic’s employment impact report.
“If you’re Lufthansa, in March and April you probably thought this crisis was like SARS, where we have to survive now, but then you can go back to business,” he added. Stern. “Today, they say we do not want to return to pre-pandemic activities by 2025.”
The expected cuts will add to hundreds of thousands of job losses counted since the onset of the coronavirus outbreak. In Britain alone, 730,000 jobs have been cut since March, as the economy shrank by a fifth in the second quarter. The government recently warned that more workers are at risk of falling into unemployment if a national furlough scheme that supports five million workers expires in October.
The scale and speed of the cuts underscore the challenge facing leaders as they recalibrate their approach to reducing pandemic damage.
For one thing, the cost of Europe’s support programs has increased. European leaders have recently agreed on a landmark 750 billion euro stimulus package on top of hundreds of billions spent since the start of the crisis, with the ballooning of national debt and deficits.
And many of the jobs that are subsidized are in industries that have potential for irreversible damage from the pandemic.
Some 9 million European workers, up to a fifth of those currently enrolled in short-term work programs, are in what the German bank Allianz has called “zombie jobs” – positions in the automotive and aerospace industries , restaurants, shops and hotels and other sectors are not well equipped to deal with shifting consumer behavior. Many of these jobs are still almost exclusively on the books because of government subsidies, the bank said.
“The programs in Europe are more generous than in the United States, but they will not last forever,” said Simon Tilford, author of a Center for European Reform report on the economic risks of the pandemic. “Many companies will lay off workers, regardless of whether they can continue to have access to wage subsidy rules because they cannot restore demand quickly,” he said.
In the meantime, governments will “have to deal with a difficult choice about continuing to subsidize workers in sectors where there is a question about the long-term future,” including cars and aviation, he added.
Employers will soon face other financial pressures, as emergency payrolls picked up when the virus raged in the spring. In Britain, a moratorium on counterfeiting commercial properties due to unpaid rent ends in September – effectively allowing companies to delay rent payments. In Germany, a scheme allowing companies to participate in fears of filing for bankruptcy in September will also start.
The dismissals risk igniting social tensions, as Europe continues its worst recession since World War II. The European Commission expects the economy to shrink by 8.3 percent this year, with declines of more than 10 percent for projections for Italy, Spain and France before a recovery towards the end of 2021.
In some countries, workers are taking to the streets. Thousands of employees at a Nissan factory in Barcelona blocked roads and tires burned in May after the Japanese carmaker, Renault’s main partner in the world’s largest car alliance, announced plans to close the factory later this year. of a dump in global demand for cars. The company plans to cut 22,000 jobs, mostly in Europe.
More than 1,600 workers at a smart car factory in eastern France were stunned by a surprise announcement that parent company Daimler would sell the operation due to the coronavirus, planning next month’s severe protest. Local politicians warn of an economic disaster in the region if Daimler does not conclude a deal with a buyer.
Grif is trying to prevent unrest, governments are trying to kiss the blow of impending layoffs – or at least delay them until they can apply a new € 100 billion loan program to a new European Commission next year, designed to support national pay schemes.
Italy and Spain are among countries that will temporarily extend furlough programs through December, albeit with less money for businesses and the termination of some benefits, such as the exemption for employers to make health care and pension contributions. France has extended wage subsidies for another two years, but is asking employers to pay a larger share of the costs.
However, Britain is sticking to an October 31 deadline for its £ 30 billion ($ 37.8 billion) plan to “protect, support and create jobs”, after which it is expected to lose significant jobs .
Among the UK companies that have already announced cuts, British Airways, easyJet and Virgin Atlantic will leave a total of almost 20,000 jobs. Boots, Pret a Manger and a phalanx of other high street shops and grocery stores will leave at least 15,000 in the coming weeks and months. At BP, 10,000 office-based positions will go up, mostly by the end of the year. Millions of others on precarious temporary and “on-call” contracts are also at risk.
Governments are working to ensure that rising unemployment does not become a quagmire of long-term unemployment. Britain and other countries are expanding access to benefits and investing billions in programs to train workers in hiring industries, or in chemical engineering, truck driving or home care.
Britain will invest £ 800 million ($ 1 billion) in job centers and double the number of coaches to 27,000 to help retirees retire. France is recruiting thousands of new advisers to give job seekers what the government says will be more personalized direction.
Adecco, the largest temporary employment agency in Europe, whose main business involves collaborating with companies and trade unions to implement restructuring plans, has further improved its training.
“We are seeing an enormous wave of restructuring, especially in Germany, France and the United States,” said Christophe Catoir, president of Adecco for France and Northern Europe. “In September, October and November, we are likely to register a million extra unemployed in France alone – not just people in the short term, but people with high skills.”
Yet there are opportunities, he said. Engineers will be laid off at Airbus, which is cutting 15,000 jobs in Europe. But vacancies are currently plentiful for industrial and technical engineers, such as in the pharmaceutical and agro-food sectors, Mr Catoir said.
“Creating a mobility of skills will be the basis of a rebound,” he said. “Without it, you will continue with unemployment.”
