As many as 59 million jobs are at risk of cuts in hours or pay, temporary furloughs or permanent layoffs, especially in industries like transportation and retail, according to a study by McKinsey & Company.
Governments are warning that millions will soon lose paychecks, and the European Central Bank last week said unemployment was likely to surge and stay high even when a recovery from the pandemic unfolds.
“Europe has been successful at dampening the initial effects of the crisis,” said John Hurley, senior research manager at Eurofound, the research arm of the European Union. “But in all likelihood, unemployment is going to come home to roost, especially when the generous furlough programs start to ease off.”
“There’s going to be a shakeout,” he added, “and it’s going to be fairly ugly.”
Compared with the United States, which lost more than 20 million jobs in April alone, the furlough programs in the European Union have prevented unemployment from going off the charts. Britain, Denmark, France and Germany are among the countries that have employed so-called short-work schemes, effectively nationalizing the paychecks of about 60 million private-sector employees.
But even before a recent resurgence of coronavirus cases, the pandemic’s economic damage was growing, and it now appears those expensive government programs postponed, rather than prevented, the pain for some workers. Some companies believe the disruption is the best time to move forward on long-contemplated downsizing.
Airbus, BP, Renault, Lufthansa, Air France, the Debenhams department store chain, Bank of Ireland, the retailer W.H. Smith and even McLaren Group, which includes the Formula One racing team, along with countless smaller businesses, are among those planning cuts that will sweep factory workers, retail employees, and high-paid white-collar workers into the ranks of the unemployed.