European jobless rise contained by government help

FRANKFURT, Germany (AP) — The unemployment rate in the 19 countries that use the euro currency inched higher to 7.4 per cent in May from 7.3 per cent in April as governments used active labour market support programmes to cushion the impact of the virus outbreak on workers.

The figures released yesterday by statistics agency Eurostat show how European governments held down the rise in unemployment through programmes that pay part of workers’ salaries in return for companies not laying them off.

Another factor limiting the jobless rate is that people dropped out of the labour force and are no longer looking for work. That could be because they are limited by confinement measures, or because they have to take care of their children who are not in school or daycare because of the lockdowns.

The government support for wages is granted because the companies are not to blame for the economic trouble – countries around the world have had to limit business, travel and public life to limit the spread of the coronavirus. The idea is to support the recovery since companies will not have to recruit and train new workers, having kept their staff.

In Germany, the eurozone’s largest economy, 6.7 million people were still on wage support programs in June. The programme pays at least 60 per cent of missing pay when workers are put on shorter hours or no hours.

Eurostat estimated that 12.1 million people were unemployed in the countries that use the euro. The agency said that in order to fully capture the unprecedented labour market situation, its upcoming quarterly labour survey to be published July 9 would have additional information about underemployment and job market dropouts.

The sun rises over Frankfurt, Germany, with the buildings of the banking district. PHOTO: AP