Unemployment Across Eurozone Set to Soar in 2020: McKinsey
Arslan Butt • 1 min read
Recent estimates by McKinsey predict that unemployment in Europe could surge to nearly double in the near future as a result of the shutdowns due to the ongoing coronavirus pandemic. The unemployment rate across EU27 could touch 7.6% this year and normalise only by the end of next year.
Depending on how long it takes to contain the pandemic and start recovery, the worst case scenario being forecast sees unemployment soaring to as high as 11.2% by 2021. In such a scenario, recovery to lower levels of unemployment seen during 2019 could take until 2024.
Before the coronavirus crisis hit Europe, unemployment had fallen to a near 12 year low at 7.3% during February. However, around 59 million workers across the Eurozone are now at risk for job losses, pay cuts or reduction in work hours owing to the pandemic related shutdowns, according to estimates by McKinsey.
In a bid to combat rise in unemployment, the European Commission has earlier proposed a wage-subsidy scheme to allow businesses to reduce work hours of employees instead of resorting to layoffs. Despite these stimulus measures, the EU is expected to fall into deep recession this year, with economic activity across countries sliding lower as the pandemic rages on.