(Post-)pandemic Employment Dynamics in a Comparative Perspective

Abstract

Policy recommendations Fiscal and monetary policies should remain expansionary to ensure that the nascent labour market recovery continues, allowing a quick recovery to pre-crisis employment levels. Fiscal policy should focus on pressing short-term needs, but also on supporting the EU’s transition to tackle challenges of the future, including the climate crisis and digitalisation. Policymakers need to take into account the pandemic’s divergent employment effects across industries. Employment-support schemes must be kept in place for those industries that are still suffering, and must be quickly re-activated for other areas of the economy in the case of renewed lockdowns in the autumn. This is crucial in order to minimise as much as possible the permanent labour market scarring that the pandemic will cause. Policymakers need to put particular emphasis on younger and low-skilled workers, as well as those in heavily affected industries and regions. If the pandemic has caused a permanent, structural shift in the nature of work and demand for particular skills, active labour market policies must be enacted to support the transition. Workers lacking digital skills or those living in areas with a high reliance on tourism are likely to be particularly exposed. It is of vital importance that the social security system, rather than workers themselves, bears the brunt of this transition. Long-term unemployment must be minimised as much as possible. The longer workers spend without a job, the harder it will be to reintegrate them back into the labour market.