Europe’s employment aid keeps jobs from vanishing – for now

Masha Macpherson & David McHugh

PARIS (AP) — Christian Etchebest’s Parisian bistro is a shadow of its usual bustling self. Five lunch specials sit in neat paper bags on the bar awaiting takeout customers — a tiny fraction of his normal midday business before the coronavirus.

A skeleton staff rotates in daily at La Cantine du Troquet near the banks of the Seine River, just blocks from the Eiffel Tower. One day they packaged a streamlined version of his Basque menu: sausages with a celery and beetroot remoulade, mashed potatoes and a dessert of strawberries with lemon sauce.

Yet Etchebest isn’t facing bankruptcy — not yet anyway — thanks to a French government programme that lets him put staff on reduced hours and makes up most of their lost salary, on the condition they are not fired. That support is giving him a chance to keep his trained team together, awaiting the day when restrictions are lifted and sit-down meals are again allowed at this restaurant and his six others across Paris.

Similar programmes are keeping hard-hit businesses across Europe afloat, preventing millions of workers from losing their jobs and income for now, and thousands of bosses from seeing their trained staff scatter. Some 11.3 million workers in France are getting up to 84 per cent of net salary. The government estimates the overall cost at EUR24 billion (USD26 billion), with half of all private sector employees expected to take part.

Germany’s economy ministry said three million workers are being supported, with the government paying up to 60 per cent of their net salary if they are temporarily put on shorter or zero hours. Those with children get 67 per cent, and many companies such as Volkswagen and Frankfurt airport operator Fraport add more.

Chef Amandine Chaignot receives payment from a customer after turning her restaurant into a shop to sell vegetables during the lockdown in Paris; and a butcher waits for customers at the Varvakios meat market in Athens. PHOTOS: AP

Restaurant owner, Christian Etchebest and his chef Thierry Larallde in the restaurant La Cantine du Troquet in Paris
Chairs and tables are piled in front of an eatery in St Mark’s Square in Venice

The impact of the coronavirus pandemic and the cushioning provided by such short-work programmes will be underlined when new unemployment figures for the 19-country eurozone are released.

Such programmes are different from jobless benefits. They are only for temporary shutdowns that are no fault of the business itself. And they are no panacea. Such programmes can’t save jobs that disappear due to long-term slowdowns in customer demand or to technological changes. But it gives workers and bosses breathing space and hope, preventing the unnecessary destruction of otherwise viable businesses.

“I will roll up my sleeves up and I will fight for all my restaurants,” Etchebest said. “For the majority of my staff to remain with me and so on. What else can I say? I can’t contemplate the contrary … I will fight for it until the end.”

His chef, Thierry Lararralde, was weathering the crisis financially thanks to the support. “I can’t say I’m struggling; my net salary is around EUR3,000 (USD3,222 a month), I am making EUR700 (USD750) less.” He is making ends meet by spending less on gas and cooking at home: “It’s cheaper, we adapt.”

The takeout crew pushed aside their masks to eat together, Etchebest slicing a rare roast beef on a wooden board for them.

Etchebest realises the road ahead could be tough after they re-open with fewer tables due to social distancing requirements.

“I am fully aware we will have 40 per cent, 50 per cent less of business,” he said, adding that some employees with health risks may not return. “I think everyone needs to adapt their business model — financially and operationally.”

Economist Holger Schaefer at the German Economic Institute in Cologne said short-work support gives employers more options than the stark choice of keeping people or firing them.

“I can say, ‘You come 70 per cent of the hours, or 50 per cent or 30 per cent.’ One doesn’t have to say either all or nothing,” he said. “When the crisis is past and the demand for labour rises, then the business owner has exactly the right staff available right away and doesn’t have to find new people.”

The support also bolsters a country’s entire economy. “When someone is afraid that their job will be lost in the near future, that person limits their consumption, they don’t buy a new car and spend less money, and that has in turn an effect on the macro-economy,” Schaefer said.

Short-work schemes proved their value during the Great Recession in Germany, where 1.4 million workers took part. Encouraging companies to keep workers meant the unemployment rate barely budged even as the economy plummeted, rising from 7.3 per cent in January 2009 to 7.5 per cent in December that year even as the economy shrank a painful five per cent. Growth then quickly rebounded.

It’s the flip side of a European labour market, where worker protections are often blamed for deterring hiring in good times. It took seven years for unemployment to drop from a peak of just over 12 per cent in 2013 in euro-currency countries to 7.3 per cent in February, before the economic impact of the coronavirus crisis hit.

Manager of Brasserie Berlage in The Hague in the Netherlands Femke Zimmermann has her eye on re-opening even as she spends most days at home looking after her one-year-old and five-year-old sons while the restaurant’s owners pay her with government help.

For now, she is not overly worried about losing her job. She stays in contact with her team and asked them to come in to give the restaurant a two-day spring clean.

“They hate sitting at home. They want to do something for the business,” she said.

Athens waiter George Sakkas, 26, is getting by on a Greek government programme that lets businesses suspend workers’ contracts and replaces their pay with a flat stipend of EUR800 (USD870). Businesses that take the help cannot fire staff.

“The stipend definitely helped,” he said, noting the amount was roughly what he would make anyway.

“In the beginning we didn’t know about the stipend, so (the closing) hit us very badly,” he said. “When the stipend arrived it gave us some breathing space.”