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– The crisis in which we find ourselves now is an economic crisis greater than the financial crisis.
By Ivar Horneland Kristensen, CEO of Virke Lead Organization. This is a discussion post that expresses the views of the submitter.
The recent development of infections and the tightening of measures have returned the business community to March conditions, with young workers bearing the greatest cost. Virke’s polls show that layoff numbers can rise by as much as 40,000 before Christmas.
If infection control measures continue until the end of December, 1 in 6 companies in the commerce and services industry fear they will end or fail. Without measures to keep companies alive, thousands will be left out of working life. At worst, it could lead to a lost generation.
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The hardest hit
Over the next three years, some 200,000 young people will start working life in Norway. It is their future that we are putting in jeopardy if today we allow tens of thousands of jobs to be lost.
The lesson from the crisis so far is that industries that employ many youth and young adults are the hardest hit by infection control measures, with the restaurant industry as the clearest example. It is in the most affected industries where many have their first encounter with working life.
A large proportion of the up to 40,000 workers now at risk of being laid off are young adults. If infection control measures persist until the end of December, many companies in the worst-hit industries fear they will have to end or go bankrupt. This will mean the loss of many thousands of jobs.
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NAV figures show that 24% fewer jobs have been created so far this year than at the same time last year. Research shows that younger workers can be severely affected after a period of unemployment.
Created very few jobs
Research on young people who entered the labor market after the financial crisis has documented the consequences of starting a career after a crisis: job prospects were poorer and wage levels lower than comparable generations, and the differences persisted for up to 10 years after.
Thus, young workers end up in trouble. On the one hand, large industries employing thousands of young and inexperienced workers have been hit hard by the crisis. Many of the workplaces are in danger of succumbing to the new round of austerity measures.
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On the other hand, very few jobs are created in the rest of working life to eliminate the increase in unemployment due to the crown, not to mention the new cohorts of workers entering working life.
Economic crisis bigger than financial crisis
After the financial crisis, we speak of a lost generation of young people in Europe who ended up without work. The crisis we find ourselves in now is an economic crisis greater than the financial crisis.
So far, the crisis has been met with strong measures by the government, but we are concerned that they will start looking for solutions long before the crisis ends. In addition, they create schemes that do not stimulate activity to a small extent, but instead cause companies to actually have to choose between closing for a time or going under.
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To save jobs in industries where many young people work, Virke believes that:
- The government must launch a wage subsidy plan. If the scheme is generous enough, this will help more people get workers back rather than letting them stay laid off, while also making it cheaper for the state.
- The compensation plan must cover at least 80 percent of companies’ unavoidable fixed costs, and the plan must last as long as the pandemic places restrictions on the business community.
- Companies in difficulty need help as soon as possible, otherwise the risk of job losses increases.
- The level of taxation on typical products of border trade must be harmonized, so that as many temporary jobs as possible that we have gained on the Norwegian side of the border during the crown crisis becomes permanent. Trade is the gateway to working life for many young and unskilled workers.
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