Covid-19 has not only had an unequal impact on public health, it also threatens to spread future economic inequality and put European cohesion at risk. One year after the first lockdown measures were taken, we find that the risk of higher inequality is present in various forms within the European labour market.
Here are the main findings of our report:
- Government support measures kept unemployment and employment relatively stable. However, the numbers of hours worked shows large divergences across eurozone countries. In the eurozone, this number dropped by 17% in 2Q20, but the decline ranged from 7.5% in the Netherlands to 26% in Greece.
- The divergence in hours worked is clearly related to the relative dominance of sectors that were hit hardest by lockdown measures (manufacturing of vehicles and transport material; wholesale and retail trade; hotels, restaurants and air travel; professional and real estate services; arts and entertainment). These represent up to 40% of the national gross value added in Greece, but less than 25% in Ireland.
- These sectors present shared characteristics across countries, making these countries vulnerable to a rise in inequality: the sectors are intensive users of non-standard contracts (where lower-educated and young workers are concentrated) and low-paid jobs. The former represents 30.5% of employment in Covid-vulnerable sectors in the eurozone, the latter, 23%.