Departmental Papers

European Labor Markets and the COVID-19 Pandemic: Fallout and the Path Ahead

BySakai Ando, Ravi Balakrishnan, Bertrand Gruss, Jean-Jacques Hallaert, La-Bhus Fah Jirasavetakul, Koralai Kirabaeva, Nir Klein, Ana Lariau, Lucy Qian Liu, Davide Malacrino, Haonan Qu, Alexandra Solovyeva

March 3, 2022

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Sakai Ando, Ravi Balakrishnan, Bertrand Gruss, Jean-Jacques Hallaert, La-Bhus Fah Jirasavetakul, Koralai Kirabaeva, Nir Klein, Ana Lariau, Lucy Qian Liu, Davide Malacrino, Haonan Qu, and Alexandra Solovyeva. "European Labor Markets and the COVID-19 Pandemic: Fallout and the Path Ahead", Departmental Papers 2022, 004 (2022), accessed 12/6/2025, https://doi.org/10.5089/9798400200960.087

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Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

In 2020, the COVID-19 pandemic caused by far the largest shock to European economies since World War II. Yet, astonishingly, the EU unemployment rate had already declined to its pre-crisis level by 2021Q3, and in some countries the labor force participation rate is at a record high. This paper documents that the widespread use of job retention schemes has played an essential role in mitigating the pandemic’s impact on labor markets and thereby facilitating the restart of European economies after the initial lockdowns.

Subject: COVID-19, Employment, Health, Labor, Labor markets, Technology, Unemployment, Unemployment rate

Keywords: aggregate labor market outcome, automation, contact-intensive sectors, COVID-19, Covid-19 pandemic, Employment, EU unemployment rate, Europe, Global, hiring subsidy, job retention schemes, labor market, labor market condition, labor market outcome, Labor markets, Labor reallocation, layoffs, policy support measure, reallocation, recovery prospect, reskilling, retention scheme, Unemployment, Unemployment rate, unemployment rate forecast, vacancies

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