The consulting firm warns in a report released on Monday that the unemployment rate in the EU could drop from around 6% to over 11% and remain high for years if the disease is not brought under control quickly.
McKinsey estimates that one in four jobs in the European Union and the United Kingdom may reduce working hours or wages, temporary absences or permanent layoffs. Professions that do not require close contact with others, including accountants and architects, are considered to be low risk, as well as those that provide essential services such as the police.
Some 55 million workers are employed in high-risk occupations, including retail cashiers, cooks, construction workers, hotel staff and actors. About 80% of jobs considered to be at risk are occupied by people without a university degree, employees of small businesses being particularly at risk.
In a scenario in which Europe fails to contain the virus within three months and is forced to continue social distancing measures throughout the summer, the unemployment rate in the EU would peak at 11 , 2% in 2021, with a complete recovery unlikely until 2024.
The UK covers 80% of workers’ wages for at least the next three months up to a maximum of £ 2,500 ($ 2,900) per month. Germany and France have set up similar programs. EU coronavirus rescue program includes up to € 100 billion ($ 110 billion) in wage subsidies to prevent mass layoffs, as well as hundreds of billions of business loans and credits to EU governments.
“It is imperative to safeguard jobs at risk in otherwise healthy and productive companies; the loss of these jobs would not only be an individual tragedy, but would also be very painful from an economic point of view, “said the McKinsey report.
The US job market has already been criticized by the pandemic, with around 22 million people, or around 13.5% of the workforce, filing initial unemployment claims since March 14. The country’s unemployment rate, which fell to 4.4% in March from a historic low of 3.5% in February, is expected to hit double digits in April.
Many economists expect US unemployment to eventually reach 15% or more. JPMorgan economists predict a peak of up to 20%.
Employment in the United States fell faster and more deeply during the global financial crisis of 2008 than in Europe, noted McKinsey, possibly because labor market regulations are more relaxed in America. The US labor market, however, rebounded much faster, with employment returning to pre-crisis levels in late 2014. It took Europe another two years to do the same.