Despite the recent rollout of vaccination schemes, the economic consequences of the pandemic are expected to last, affecting employment trends and the investment decisions of a wide range of businesses in Europe for the foreseeable future.
The 2020 Cedefop skills forecast data did not include pandemic-related impact. To investigate potential current and future effects of the pandemic on employment in the EU-27, Cedefop analysed a scenario developed using its skills forecast framework, combining quantitative analysis with qualitative assessment, and involving national experts from its EU skills forecast network – the ‘Covid-19 scenario’. Assumptions included both demand and supply shocks, creating a narrative for each Member State, which was in turn validated by country experts. The scenario looked into both short- (up to 2022) and medium-term effects (up to 2030). The short-term effects are discussed below.
Estimated job loss
A comparison of employment trends based on the 2020 skills forecast and the Covid-19 scenario reveals that the pandemic effect on employment across the EU is expected to be significant for at least the next two years. To get an estimate of that effect, the Cedefop skills forecast baseline scenario (before the outbreak of the coronavirus crisis) predicted an employment growth in the EU-27 of almost 2 million jobs between 2019 and 2022. The Covid-19 scenario predicts a decline in employment of about 5 million jobs for the same period. Together, these estimates show that almost 7 million jobs will have been lost or not created at all by 2022, compared to what employment would have been in the absence of the pandemic.
Sectors most and least affected
Not all sectors of the economy will be equally affected. As Cedefop expert on skills forecasts, Ilias Livanos, explains: ‘The coronavirus has favoured jobs in sectors and occupations flexible enough to adapt to the new norms of social distancing and telework. These are likely to persist even after the pandemic, altering the nature of work, which traditionally called for physical space.’
The infographic below shows the economic sectors expected to be most and least affected over the next two years. ‘Accommodation and food services’ is the sector affected the most, as such activities have been suspended for some time in most countries, while it remains uncertain when operations will return to normal. Employment in the ‘manufacturing’ and ‘distribution and transport’ sectors – which are among the largest in terms of employment in the EU, as well as some of those hit the hardest in 2020 – is expected to remain considerably below the level it would have been without the pandemic.
This reflects the widespread inability for remote operation or social distancing for these sectors, which is expected to hinder their operation as people keep practising social distancing in the near future as a result of an ‘inertia effect’ of the pandemic. It also highlights their reliance on consumer expenditure, which is expected to drop in the next few years due to debt accumulated by households during the crisis. Similarly, business activities such as ‘real estate’, ‘scientific and technical activities’ and ‘administrative and support service activities’ are among the sectors hit the hardest, demonstrating how the business environment has been slowed down by Covid-19.
The ‘non-marketed services’ sectors (health, public administration and education), which covered around 25% of EU employment in 2019, are among those in which employment is expected to be least affected compared to pre-Covid estimations. This is due to both the inherent necessity of these sectors in battling the pandemic (mostly health but also public administration) as well as the higher levels of employment protection public sector activities traditionally enjoy. Employment in the ‘utilities’ and ‘mining and quarrying’ sectors is also not expected to be severely below the baseline forecast levels, mainly because practising social distancing is easier in those sectors, while they also rely less on direct consumer expenditure.
NB: The effect is captured as the percentage difference in employment from the baseline (pre-Covid) skills forecast scenario, average for 2021 and 2022.
Occupations most and least affected
The pandemic will also affect employment in different occupations in varying degrees over the next two years. Several occupations are expected to continue facing employment decline: some mainly due to inability to work from home (e.g. assemblers, plant and machine operators), some following a sharp decrease in consumer demand (e.g. science and engineering professionals), while others face both kinds of shocks (e.g. food processing workers, farmers and fishers).
Overall, the pandemic will tend to exacerbate the ongoing polarisation of occupational employment in Europe, with high-skilled and elementary occupations affected less than occupations of medium qualification. Employment in most of the medium-qualification occupations is expected to be more than 4% below the level predicted pre-Covid. The infographic shows that all five most impacted occupations are of medium qualification. Assemblers, subsistence farmers and stationary plant operators will suffer the biggest employment losses, while high-skilled occupations (professionals, associate professionals) are in general among those affected the least by the coronavirus. Of the five least affected occupations, three are health-related, highlighting their necessity in the fight against the pandemic, while the other two (teaching professionals, information and communications technology professionals) can be easily performed via teleworking.
The full results of the skills forecast Covid-19 scenario work, which include impact across sectors and occupations for each Member State up to 2030, will be published later this year.