Employment impact of Covid-19 crisis: from short term effects to long terms prospects

We contribute to the assessment of the employment implications of the COVID crisis by classifying economic sectors according to the confinement decrees of three European countries (Germany, Spain and Italy). The analysis of these decrees can be used to make a first assessment of the implications of the COVID crisis on labour markets, and also to speculate on mid and long-term developments, since the most and least affected sectors are probably going to continue to operate differently until a vaccine or other long-term solution is found. Using an ad-hoc extraction of EU-LFS data, we apply this classification to the analysis of employment in Germany, Italy and Spain but also UK, Poland and Sweden, in order to cover the whole spectrum of institutional labour market settings within Europe. Our results, in line with recent literature, show that the employment impact is asymmetric within and between countries. In particular, the countries that are being hardest hit by the pandemic itself (Spain and Italy, and also the UK) are the countries more likely to suffer the worst employment implications of the confinement, because of their productive specialisation and labour market institutions. Indeed, these were also the labour markets that were more vulnerable before the crisis: characterised by high unemployment and precarious work (especially temporary contracts).