First, we will assess the impact of the activity shock on labor demand for April. Companies have allowed employees to work remotely when their position allows. Then some work was done to prevent layoffs.
We are particularly concerned with the issue of partial activity of salaried workers in the Covid-19 process. Based on the value-added shock presented in our previous article, we will calibrate potential job losses in business sectors throughout April.
The analysis also provides data on remote work and administrative shutdowns. This work is supported by information from each country, particularly from official national data or press information.
Implementation of Remote Working
Companies prefer to work remotely in every possible occupation to ensure social distancing and comply with health restrictions.
We use employment data by occupation and economic activity to which we apply the assumptions of teleworking based on 528 occupations from the employment survey accepted in the context of international comparisons.
These socio-professional characteristics intersect with sectoral characteristics. Altogether, in France, the use of remote work may concern 85% of staff in finance and insurance activities, according to our assumptions.
Using data from the Bureau of Labor Statistics for European countries, we can see that remote working affects an average of 25% of jobs in Italy and 37% in the UK. Once the occasional remote work experience has been streamlined, it has become more common and graphics have gained an upward momentum.
In 2019, only the Netherlands, Finland and Luxembourg had a regular telework rate of over 10%. Germany, France, Italy and Spain recorded rates of 7%, 5.2%, 4.8%, 4.7% and 3.6%, respectively.
But the desire to preserve productive activity as best as possible has prompted companies to reconsider their work organization and go far beyond the usual thresholds. All employees in the civil service are encouraged to work remotely.
Adjusting the demand for labor to a decrease in activity
The operating shock due to the restrictions primarily affected businesses and industries that were directly affected by the administrative closures. The impact on employment follows the same logic.
Suppose that companies’ demand for labor in each sector is regulated at the same rates as the decline in the activities they face. In this case, we get the overall shock on employment.
This shock is more pronounced than the overall shock on value added. This is because the decline in activity associated with closures has increased mainly in more labor-intensive sectors.
Starting from this observation, we note:
- The UK (together with Spain) recorded the sharpest fall in labor demand, while the decline in value added was weaker there than elsewhere. Many sectors hit by the crisis are very employment-intensive and have a very high precarious workload, especially among the self-employed.
- By contrast, Germany and the United States, where the shock to value added is of the same magnitude, saw a weaker decline in labor demand than elsewhere. Germany’s activity partially protects its expertise in the continuing manufacturing industry from the shock of relative employment shutdown.
- The decline in labor demand has been particularly significant in France, Italy, and especially in Spain, where containment rules are the strictest and the decline in activity is strongest.
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This situation is explained especially by the fact that the loss of activity is in sectors with a high employment content. The share of employment in retail and restaurant-hotel activities in Spain and Italy reached 24% and 20% of total employment, respectively, compared to around 17% in Germany and the United Kingdom.
However, if the adjustment of labor demand to the production shock is very significant, the ultimate impact on salaried employment appears ultimately weak given the potential job losses, at least in Europe.
In the absence of a short-time work plan similar to that implemented in Europe, the United States is experiencing a significant devastation of salaried jobs, which amounts to 14.6% of total salaried employment.
In Europe, the destruction of salaried jobs will, at the end of April, concern around 1% of total salaried employment in France and Italy, around 3% in Spain and the United Kingdom, and just over 4% in Germany.
Dr. Yaşam Ayavefe
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https://greenclimate.io/
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