The unemployment rate in Europe is half that of the United States. That's why

The unemployment rate in Europe is half that of the United States. That’s why

Eurostat said on Wednesday that the unemployment rate in the EU rose from 6.4% in March to 6.6% in April.

The number of unemployed is not evenly distributed among all EU countries. The unemployment rate in Spain, which has been severely hit by the coronavirus, has risen from 14.2% last month to 14.8%. Eurostat said that at the same time, Germany’s unemployment rate stabilized at 3.5%.

Nevertheless, the data still shows that Europe can control the unemployment rate while overcoming the worst economic crisis since the 1930s. The European Commission predicts that the GDP of 19 countries using the euro will be 7.75% contraction this year, A record.

Economists are partly attributed to the widespread reliance on short-term work plans, which encourages troubled companies to retain employees but reduces working hours. Then, the state subsidizes part of its wages. For example, in Germany, the government pays 60% to 67% of the wages for non-working hours.

Bert Colijn, senior Eurozone economist at Bank of Holland ING, told clients on Wednesday: “Short-term work plans are very effective in mitigating the initial impact of the economic crisis.”

This type of procedure has always been popular in Europe, where it is difficult to hire and fire workers, and many employees are protected by collective bargaining agreements. In the US, they are used less frequently Unemployment rate reached 14.7% In April.

According to a study by the European Trade Union Institute, by the end of April, EU companies had submitted approximately 42 million applications for supporting workers through short-term work plans. This is equivalent to approximately 27% of all EU employees.

But UBS economist Anna Titareva said labor market surveys may not fully reflect damage to EU workers. The survey surprisingly shows that Italy’s unemployment rate fell from 8% in March to 6.3%.

Titareva said in a research report: “It seems that people who lost their jobs after imposing travel restrictions are not counted as unemployed.”

In order to be considered unemployed in the EU survey, one must actively seek a job and prepare to start a new job within the next two weeks. Titareva said that mobility restrictions or ongoing restrictions on parenting needs may force people to postpone finding jobs.

Moving forward depends largely on the duration and scale of the economic recession. The European short-term work plan can be used as a stopgap measure, but it can only be used temporarily.

“As the recovery may continue for a considerable period of time, the unemployment rate will rise significantly, although short-term jobs will help demand rise, thereby allowing output to recover more quickly,” Colin said.

-Correction: The early version of this story missed the month when the US unemployment rate reached 14.7%.

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