Unemployment rates increase dramatically in Europe and US

Eloise Hanson Eloise Hanson Uploaded 02 April 2020

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Europe and US: Jobless claims in the US have soared past three million to a record high, whereas at least one million people have lost their jobs in the last two weeks in Europe.

Reuters predicts that the number of Americans filing unemployment claims is likely to have shot to a record high for a second week in a row. 

According to its survey of economists, initial claims for state unemployment benefits probably raced to a seasonally adjusted 3.5 million for the week ended March 28. Estimates in the survey were as high as 5.25 million.

Bloomberg agrees, stating that the current figure will include people that were not counted in last week’s total. The highest estimate for today’s data is at 6.5 million.

Last week, the US Department of Labor reported a surge in the number of unemployment insurance claims to almost 3.3 million.

The number is a record high, overtaking that of the Great Recession in 2009 (665,000) and its all-time mark in 1982 (695,000).

Danny Blanchflower, professor at Dartmouth College, told the Financial Times that unemployment is rising 20 times faster than in the financial crisis.

The US Travel Association has warned of a $910 billion loss to the country’s economy due to the decline in travel, which is seven times the impact of 9/11 on the travel sector revenue.

In the second quarter, travel related jobs are forecast to fall by 4.7 million, resulting in a total employment loss of 5.9 million jobs in the US. 

The US economy is projected to enter a protracted recession based on the downturn in travel, which is likely to last at least two quarters with the lowest point in the second quarter of 2020.

Turning to Europe, the European Trade Union Confederation (ETUC) has revealed that at least one million people have lost their jobs in the last two weeks alone. This figure only includes contract workers who have applied for unemployment benefits.

"What we are experiencing at the moment, especially in the last week, is that the number of companies disappearing from the market is increasing dramatically," said Luca Visentini, ETUC secretary general. "Thousands and thousands of small and medium enterprises that have been locked down will not be able to come back to the market because they are dying. And on the other side we are witnessing at least one million workers that became unemployed across the different European countries because of the lack of short time work arrangements or sick pay."

The Office for National Statistics has announced the first of its weekly release of information about the condition of the UK economy. 

27 per cent of UK companies are already cutting staffing levels “in the short term” according to data collected between 9 March to 22 March 2020. This equates to one in four businesses.

In Norway, the unemployment rate has risen by 8.1 per cent, with the country’s Labour and Welfare Administration declaring this the highest level since the Second World War.

Spain has seen a record rise in unemployment to 3.5 million amid the country's lockdown, the highest level since April 2017.

In France and Germany, nearly 900,000 companies have collectively applied for wage subsidies. 

The French government is spending €45 billion to pay businesses to not lay off workers. 3.6 million employees have been put on paid furlough, the Labor Ministry said. Officials expect the numbers to more than double as it receives “several thousand requests per minute.”

Although unemployment has risen very little in the latest data from Germany, which only covers the period to March 12, almost five times more businesses are applying for government wage subsidies than the 2008-09 recession.

A UN report estimated that up to 25 million jobs could be lost around the world.

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