According to researchers from the European Central Bank, the unemployment rate is likely to increase later this year, as the damage to European jobs due to virus blockages can only be temporarily halted, Bloomberg reports.
Furlough’s programs have saved millions in wages, allowing countries like Germany, France or Spain to avoid the massive surge in unemployment that has occurred in the US since the pandemic began. However, the sluggish recovery means some companies cannot afford to bring back all of their workers.
Central banks continue to emphasize that the labor market is a major risk and why many governments have tried to extend programs that provide maximum job protection.
“It should be expected that not all workers working on short-term schemes and temporarily laid off will be able to return to their previous jobs, as a result, in the short term, further growth in unemployment in the euro area is expected”, – economists say.
An ECB analysis using data from the region’s five largest economies shows that the consumer, manufacturing, leisure and tourism sectors have been hit hardest since the crisis hit earlier this year.
It is also important to note that the job postings on the website do continue to signal that labor demand remains weak.
“If the recall of temporary unemployment does not occur in full, a jump in the level of division of jobs could lead to a further deterioration in the conditions in the labor market”, – said researchers at the ECB.