More than a quarter of all jobs in Europe could be impacted by the economic fallout of the coronavirus pandemic, according to an analysis from McKinsey.
The sharp rise in benefit filings might just be the tip of the iceberg. The study estimates that up to nearly 59 million jobs (26 percent of total employment) across Europe are potentially at risk of reductions in hours or pay, temporary furloughs, or permanent layoffs.
To arrive at this figure using a granular approach, we first used occupation-level data to identify professions that are likely to be prevented from a quick return to business as usual, based on the necessary physical proximity to coworkers and exposure to the general public. We sorted occupations into three categories:
Low-risk occupations include 160.5 million workers who either do not work in close proximity to others (such as accountants, architects, and journalists) or whose work provides essential health services (such as physicians, ambulance drivers, and health-service managers) or other essential services (such as those in police work, food production, education, public transit, water, and utilities).
Medium-risk occupations include 14.7 million workers who perform their work in close proximity to others but do not interact with the general public; this includes machine operators, construction workers, and psychologists.
High-risk occupations include 54.8 million workers, most of whom work in close proximity to others and have significant exposure to the general public; they include retail cashiers, cooks, and actors.
Second, after determining the occupation-level risk, we used the model to estimate an additional, industry-specific risk factor for each job, based on short-term changes in demand because of the COVID-19 outbreak.
The breakdown of jobs at risk by job cluster in Exhibit 1 shows that 50 percent of all jobs at risk in Europe come from customer service and sales (25 percent), food services (13 percent), and building occupations (12 percent); production work (9 percent), office support (8 percent), and community services (8 percent) make up another 25 percent. Less affected are workers in the health, science, technology, engineering, mathematics, business, and legal professions; educators; and trainers.McKinsey urged policymakers to take “swift and forceful action” taking into account the varying impact across industries, occupations and demographics.
“Europe must avoid the significant rise in unemployment witnessed during the 2008-9 financial crisis,” when the unemployment rate rose by 27 percent, the report said.
Social inequalities could be exacerbated by the economic shock due to a high correlation between a low education level and the most impacted jobs, the analysis warned.
Younger workers and staff at small and medium-sized enterprises are also more exposed to the economic impact of the virus. Alongside economic stimulus measures, McKinsey suggested governments could incentivize redeploying workers to critical sectors — for instance, food retailers could temporarily employ restaurant staff.
Government-run programs could retrain workers or even pay small companies while staff undergo training, the study said. To protect jobs, companies may need to separate work shifts, segment workforces or increase investments in remote working.