Businesses around the world have seen major losses and redundancies amid the pandemic’s mass shut down of public life. Figures released this week showed the mounting damage to labour markets resulting from measures to slow the spread of coronavirus. The US has seen more than 3.8 million people filed new claims for jobless benefits, taking the six-week total since the start of the lockdowns to more than 30 million.
While filings remain at levels unseen before the crisis, it’s the fourth week that the pace of the losses has decelerated, suggesting that the worst of the labor-market hit may have already occurred.
At the same time, job losses are still climbing and employment is expected to take years to eventually recover.
Plus, more layoffs could be in store as states and municipalities face severe budget crunches.
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Jay Powell, head of the US Federal Reserve, said it was “heartbreaking” to see the job gains of recent years under threat.
Mr Powell said data due in the coming week is likely to show the US unemployment rate has risen, in the space of two months, from a 50-year low into double digits.
He acknowledging that it would “probably take some time for us to get back to a more normal level of unemployment”.
He said: “The chances are that it won’t go right back to where we were.”
In Europe, official unemployment data understate the extent of the disruption, but figures given by national governments in the five largest economies show that more than 35 million workers are having part of their wages paid by the state.
The UK is expected to see a spike in unemployment, but previously recorded figure in March before the lockdown showed an increase of only 12,100 claims.
Yael Selfin, chief economist for KPMG, said early figures for March underline how badly coronavirus will affect the UK jobs market.
She said: “Early figures for March underscore the impact COVID-19 is likely to have on the labour market.
“We estimate that as many as 13 million jobs are in sectors highly affected by the lockdown, representing 36 percent of all jobs in the UK.
“[This] could see unemployment rising to just under nine per cent during the lockdown period.”
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UK hospitality businesses are also warning that they may not be able to cover the cost of operating with strict social distancing measures in place, underlining the risk of a further wave of job losses once governments start to scale back support for staff on furlough.
Mark Wall, chief European economist at Deutsche Bank, said: “We are nervous that this ‘invisible’ unemployment [in these partial employment schemes] will become more visible.”
He added that over time, business failures would mount up “and you will get a gradual conversion of partially unemployed to fully unemployed.”
Rishi Sunak, Chancellor in the UK, has recently extended the furlough scheme through to the end of June.
Germany’s Federal Employment Agency said this week that its short-term leave scheme, known as Kurzarbeit, now covered more than 10 million workers, double a previous estimate, and accounting for more than a fifth of the workforce.
In France, one million workers have been added in the past week to an equivalent scheme of chomage partiel, bringing the total covered to 11.3 million, more than a quarter of the workforce.
Florian Hense, economist at Berenberg, said he expected European governments would extend furlough schemes to contain economic damage, but added that he still did not expect unemployment to start coming down before the summer of next year.
He said: “The second wave could come in half a year or 12 months, when we finally have more evidence on how many companies have made it through the crisis — and how many haven’t.”