Changes in the labor market due to COVID-19 are just one exercise: a much bigger problem awaits

More layoffs in certain sectors

Tadas Povilauskas, an economist at SEB Bank, recently wrote on his social network Facebook that the reintroduction of universal quarantine in Lithuania is bad news for tens of thousands of employees.

According to him, the reason for this is very simple, some sectors will not be able to work fully, so employers will have to decide whether to put workers on downtime or fire them.

The behavior of companies, according to the economist, will depend on the sector to which they belong and on their financial capacity to retain the employee.

“Spring has shown that firing workers and rehiring them quickly is not that simple and that they need protection.

Looking ahead, the situation is sadder for some sectors, such as housing, catering, cultural services, where there are probably few objections that the epidemiological situation will continue to be difficult in the coming months, so it is likely that these sectors return to a normal work environment. , it will be available only in the spring.

So the question is, is it worth it for the cafeteria and restaurant to wait four months and pay subsidies, even 10%, to pay the rent if it is not reimbursed, if take out is not delivered, or is it only a minimum? I believe that now we can see more layoffs in the accommodation and catering sector than in the spring ”, explained T. Povilauskas, noting that in total some 70-80 thousand people work in these sectors. workers.

COVID-19 called exercise, a problem elsewhere

When Danas Arlauskas, president of the Lithuanian Employers Confederation, was asked whether employers would lean more towards downtime or laying off employees in the near future, he considered that the situations here could be very different.

“It just came to our attention then.

Companies react differently (to quarantine), others offer employees leave without pay, other companies require an employee to write leave requests. There are several things here, depending on the executives who run these companies.

I want to emphasize one simple thing. Those executives who do not behave entirely correctly with regard to employees have serious doubts about the future success of their business, even after the quarantine ends. Because finding the right employees the further away you are, the more difficult it will be, because all those who have competence and motivation will be caught by those who see the employee as a decisive factor for their economic success, “he explained.

According to D. Arlauskas, the economic crisis of 2008 more than a decade ago already purified companies and entrepreneurs who knew how to adapt to the situation and understood the importance of human resources, and highlighted those who tried to succeed at least temporarily, but it was not sustainable.

However, as he said, for the moment it will also be important that companies adapt to the situation, react and fear not different business failures, but completely different job market challenges.

“There is no need to fear COVID-19 here that someone will go bankrupt. They (business-ed.) Will go bankrupt because they have not been able to adapt, like restaurants or cafes that organize packed lunches or dinners. <..>

With us, those bankruptcies are somewhat painful and viewed negatively by the public, but in a normal world this is commonplace and even technological change, they will be more dramatic and many more companies will fail if they do not adapt to technological change, and COVID-19 will seem easy to deal with with much more serious changes. .

We should already be talking here about what awaits us in 3 or 5 years, when companies face more serious changes. The indicator that says that in Lithuania only about 10 percent. employees work in modern companies, in the workplace, which is the worst indicator in the entire European Union. We should talk about these things, “said D. Arlauskas on the show.

“Companies will adapt, not those that grew up with quick and easy money,” he added.

Unemployment will continue to rise

Speaking at the fair, economist T. Povilauskas was optimistic when he said that so far the quarantine conditions are not so strict that their downtime forces to announce or fire employees in sectors such as commerce, production or the industry.

“The accommodation and catering sector is leading the way in terms of downtime, with accommodation, catering and industry in April,” he added.

Regarding the increase in unemployment, and the recent announcement of the Employment Service (UT) that registered unemployment on November 1 According to the data, it reaches 14.9 percent, T. Povilauskas said that this growth is more related to pay job search benefits.

“I associate the increase registered in the number of unemployed more with the benefits for job search, with the fact that from the beginning of the year, students who study full time can register as unemployed.

“There are many things hidden behind these registered unemployment statistics, which also make our statistics worse in Europe,” he said.

It is true that the president of the Confederation of Employers D. Arlauskas also added that, in fact, situations are often such that it is simply not worth it for an employee to work today.

“There is an obvious truth here, there is even such a concept: an unemployment trap. These are the child’s money, benefits, meals, heating … Those people who received the minimum monthly wage, if we calculate that there are two parents, two children and one loses his job, so he can only earn 7 Eur if he goes back to work, this whole system is built like this.

So the question is, is it really worth working? And through COVID-19 he also receives job search benefits of 200 Eur ”, said D. Arlauskas.

T. Povilauskas predicted that both in November and December, unemployment in the country would continue to grow, which would be affected by seasonality, the introduction of quarantine and companies that no longer survived. According to him, registered unemployment will increase and peak in the first quarter of next year.

“And the situation for companies will not improve in the next three or four months, because those restrictions are likely to be even tighter in three weeks.”

Unemployment will start to decline only in the second half of next year. We do not expect very significant positive changes in the first half of next year, “predicted the economist.

The situation in the labor market remains tense, other skills will be needed

The director of UT, Inga Balnanosienė, stated in the program that the number of vacancies in October has decreased compared to the summer period, because we have about 30 thousand. registered vacancies and unemployment have risen to 14.9% of the total working-age population.

“The situation is a fall trend, when job offers in certain sectors are declining, seasonal jobs are coming to an end.

If it weren’t for such a large volume, we would treat it as a normal fall trend and the situation would not intensify much, but now that we have a second wave of quarantine, again restrictions on the economy, companies, the situation becomes quite tense again.

There is a decrease in business volumes, partial or total downtime in some companies and sectors. And certainly the situation in the labor market will remain the same until the end of the year ”, he commented.

When asked if many companies planning to declare downtime have already approached UT after the start of the quarantine, the director of the institution said that UT has not yet experienced a very large increase.

“It just came to our attention then. The number of subsidies, if we look at them in the last few days, has certainly not increased, but we expect an increase in the number of companies that will reject their employees. We currently manage around 30 thousand companies and more than 200 thousand employees who are down or who receive subsidies after a period of inactivity, ”he said.

I. Balnanosienė did not hide that the growth of unemployment in the country is really influenced by the benefits of seeking paid state employment. She estimated that some 33,000 people could have taken advantage of her. population.

“It just came to our attention then.

Throughout this period, there were 33,000 inactive people who had not worked or had no contact with the labor market until March, either with a regular employment contract or on their own. and this number remains stable, which means that these 33 thousand. it can be said that it is a consequence of the payment for job search.

All the others are people who either have lost their job, or their contract has expired and they cannot find another one quickly, or they are graduates who do not integrate so quickly into the labor market due to the tense situation ”, explained I. Balnanosienė.

In general, the manager also emphasized that today, indeed, there are many people who, due to too rapid changes in the labor market, simply cannot adapt anymore.

“I have not said many times that after the quarantine, when we overcome a pandemic, we will have to be completely different, we will need completely different skills, first of all basic skills.

We will definitely need to be able and easier to adapt to changing working conditions and we will have to look for opportunities to learn general skills: flexibility, teamwork, results orientation, decision making, quick response, knowledge of information technology, as well. like the ability to work from home, work in other conditions, in open offices, “he said.