Furloughs, Layoffs Or Wage Cuts Threaten About 60 Million Europeans: McKinsey Report

According to a latest report by McKinsey, the coronavirus pandemic in Europe could threaten jobs of almost 60 million people across the European Union and the United Kingdom.

If the pandemic is not contained soon enough, the rate of unemployment in the EU could increase to reach about 11 per cent from the present 6 per cent, and remain around that high point for years, warned a report from the consulting firm warns published on Monday.

There is also a risk of reduction in hours of pay for one in four jobs across the European Union and the United Kingdom because of the pandemic, estimated the McKinsey report. The same number could be facing temporary furloughs or permanent layoffs. The risk is however low for those professions that do not require professionals to be in close contact with others such as accountants and architects, the report noted. Jobs of those who are associated with essential services will also have their jobs secured, the report also noted.

With the EU and the UK, some of the professions that are at high risk include retail cashiers, cooks, construction workers, hotel staff and actors, which, according to the estimates of the report, employ about 55 million people. The report also noted that people who do not have a college degree and those who are employed in smaller companies are in particular danger because they comprise about 80 per cent of the jobs considered to be at risk.

The report warned that the rate of unemployment in the EU will peak at 11.2% in 2021, with a full recovery unlikely until 2024, if the bloc is unable to bring the viral pandemic under control within the next three months and is consequently forced to continue with the social distancing measures and lockdowns through the summer.

In order to safeguard jobs, business and governments need to move quickly, said the McKinsey report. It is imperative for companies to enable remote working where possible, cut costs, and separate work shifts. Loan guarantees, tax relief and guarantee pay for workers should be provided by governments.

Some measures to this effect is already being taken by various EU governments. For example, about 80 per cent of worker salaries for at least the next three months up to a maximum of £2,500 ($2,900) a month is being covered by the United Kingdom government. Similar programs have also been implemented by Germany and France. Aimed at preventing mass layoffs, up to €100 billion ($110 billion) in wage subsidies is included in the coronavirus pandemic relief package announced by the European Union. It has also announced disbursement of loans to businesses and credit for EU governments. worth hundreds of billions of euros.

“Safeguarding jobs at risk in otherwise healthy, productive enterprises is imperative; losing those jobs would not only be a tragedy on an individual level, but would also be very painful from an economic perspective,” said the McKinsey report.

(Adapted from CNN.com)

Categories: Economy & Finance, Geopolitics, HR & Organization, Regulations & Legal, Strategy, Sustainability, Uncategorized

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