Unemployment marches higher in Europe amid pandemic

AP , Thursday 1 Oct 2020

Economists expect a further rise in coming months as wage support programs expire, while a spike in infections in many countries has led to some new restrictions on businesses

A shoe shiner brushes a client's shoes in downtown Madrid, Spain, Wednesday, Sept. 30, 2020. (Photo: AP)

Unemployment rose for a fifth straight month in Europe in August amid concern that extensive government support programs won't be able keep many businesses hit by coronavirus restrictions afloat forever.

The jobless rate increased to 8.1% in the 19 countries that use the euro currency, up from 7.9% in July, official statistics showed Thursday. Some 13.2 million people were unemployed and the number of those out of work rose by 251,000.

Economists expect a further rise in coming months as wage support programs expire, while a spike in infections in many countries has led to some new restrictions on businesses and public may that may have to be broadened.

European governments have spent trillions of euros (dollars) to help businesses and to set up programs to keep workers on payrolls. In the region's largest economy, Germany, some 3.7 million people are still on furlough support programs and with no clear end to the pandemic in sight, the government has extended that through the end of 2021. The program pays over 70% of the salaries for workers put on short hours or no hours. The European Central Bank has injecting 1.35 trillion euro ($1.57 trillion) into the economy to keep loans cheap.

But while those measures have slowed the rise in unemployment, the loss of jobs is steady and expected to continue for months. Companies in the hardest hit industries such as airlines, tourism and restaurants expect a long period of weak business and are laying off workers.

The recession in some cases has also accelerated painful change that existed before the pandemic, such as technological shifts in the auto industry. Automakers Daimler and Renault, airline Lufthansa, oil company Royal Dutch Shell and travel concern TUI have announced sweeping cost-cutting and job reductions.

While industrial firms have made a stronger recovery from the severe lockdowns of March and April, services companies have done less well. Among the hardest hit are workers and small business owners in the restaurant sector, many of whom are struggling for survival.

Waiters and cooks in Lisbon's city center, where the pandemic has seen tourist numbers drop and not everyone has been covered by furlough support.

Restaurant workers Mary Lopes, 21, Anabela Santos, 48, and Carlos Silva, 69, are among those struggling. They saw their once-buzzing restaurant in Lisbon close down completely in March. When it reopened, only a few of the staff were kept on, under tougher conditions and the others were left out of work. Santos and Silva are at least getting unemployment benefit but that barely covers their bills, Lopes is not.

``I've been working since I was 16,'' said Lopes. ``I was always complimented by the customers, so I can say I was a good waitress - I know I was a very good waitress. So I don't understand this situation we are going through.''

Santos paid five months of overdue bills when she got her unemployment benefit, and sent resumes everywhere. ``I haven't managed to find another job,'' she said.

``It's an overdose of stress because we haven't a penny in our pockets,'' says Silva. ``We are left without any money after paying rent, water, energy and then we are suffering for those thirty days until the next 28th of the month or so.''

While the jobless rate creeps up in Europe, it fell sharply in August in the United States by 1.8% to 8.4%, after a sharper increase during the spring. The U.S., which has less in the way of labor market support programs, saw the jobless rate spike as high as 14.7% in May, followed by a steep fall in unemployment as businesses and states reopened.

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