News & events

EU Struggles to contain COVID-19’s Economic Devastation

The O.E.C.D measured the impact of the pandemic on jobs and conceded that the number of job losses is 10 times higher than was the case recorded during the first months of the global financial crisis in 2008. The report observed that employment in Europe, the United States and other developed economies are most unlikely to return to its pre-pandemic levels before 2022. Vulnerable workers who face tough times to find new jobs and to regain lost incomes are the most hard-hit by business lockdowns and closures.

The report estimates that joblessness in the 37 member countries of the O.E.C.D is expected to hit 9.7 percent at the end of 2020, up from 5.3 percent in 2019, and could spike to more than 12 percent if businesses shut down should a second wave of the pandemic occur. The study finds that high-income earners were 50 percent on average found to work from home than low-income earners, who are more frequently employed in critical roles and are more likely exposed to the virus. Moreover, the study revealed that women had been more adversely affected by the virus than men. Women constitute the bulk of the workforce in the most severely affected sectors, including health care and retail, and disproportionally occupy secure jobs. The O.E.C.D. researchers found that the unpaid work burdens of women were accentuated by widespread closures of schools and child care facilities.

Similarly, self-employed workers and those with temporary or part-time contracts were found to be affected by severe income losses, particularly because employers were forced to suspend their contracts to mitigate the lost income. Overall, there is a looming fear that an entire generation of young people risks being side-lined as employers freeze employment plans. O.E.C.D reported that online job advertisements haddeclined considerably by more than half since the lockdowns, and internships required to empower young people with valuable skills and experience have been reduced extensively.

Across many of the EU member states, there have been sustained efforts to contain the economic effects of coronavirus. Many governments responded by offering financial support to companies and income support to people unable to work or who were jobless. Meanwhile, European Union leaders are expected to reach a compromise on a 750 billion euro ($855 billion) fund to be injected into member states’ economies to enhance their recoveries.

By Emmanuel Duh

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The EU moves to Shore Up Youth Employment

The support action is crucial following the high levels of youth unemployment in several European societies. Young people experience increased levels of poverty and social exclusion, resulting in widening income inequality between older and younger generations. The Youth support programme aligns green and digital transitions in EU youth and employment policies. It addresses the findings of a recent publication of the Commission’s Digital Economy and Society Index, showing that a large part of the EU population “lacks basic digital skills, even though most jobs require such skills.”

As part of the Youth Employment support programme, the Commission issued a recommendation on vocational education and training, requiring member states to make their national systems more modern, attractive, flexible and fit for the digital and green economy. Also, it proposed to provide a renewed impetus to the European Alliance for Apprenticeships that will benefit both employers and young people and had already made available more than 900,000 opportunities. The renewed Alliance will promote national coalitions, support SMEs and strengthen the involvement of social partners: trade unions and employers' organisations.

By Emmanuel Duh

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The European Central Bank announces a new stimulus to combat the coronavirus

The ECB’s stimulus package adds to its lending programme already in place that allows commercial banks to borrow money from the Central Bank at a rate of minus 1 percent if they commit to lend the money to other customers and meet other conditions. This means commercial banks and other lenders are paid by the European Central Bank to receive its money. The aim is to ensure a steady flow of cheap credit to consumers and businesses in the eurozone.

The announcement of the massive new injection of monetary stimulus comes after the European Commission unveiled a plan to raise €750 billion ($826 billion) from fiscal stimulus programme by selling bonds that would be backed by all 27 members of the European Union. The stimulus package would have to be approved and ratified by European Union countries and the European Parliament.

By Emmanuel Duh

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EU sets out Climate Action and European Green Deal

In response to the climate action plan, twelve member states, including France, the Netherlands, Spain and Sweden have requested that the 2030 climate target be set “as soon as possible,” ahead of the summit meeting with China in September and the United Nations climate change conference, known as COP26 in Glasgow in November.

Meanwhile, The EU is working with other countries and regions to achieve the goals of the Paris Agreement and is a leading provider of international climate finance to support developing countries to tackle climate change.

By Emmanuel Duh

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European Commission and EIB release €8 billion in finance for 100,000 SMEs

The €1 billion unlocked from the EFSI under the COSME Loan Guarantee Facility and the InnovFin SME Guarantee under Horizon 2020 allows the EIF to provide guarantees worth €2.2 billion to financial intermediaries, unlocking €8 billion in available financing. The guarantees will be offered to the market via a call for expressions of interest issued by the EIF on 7 April to several hundred financial intermediaries, comprising banks and alternative lenders. Key features of these guarantees will be:

• Simplified and quicker access to the EIF guarantees;
• A higher risk cover – up to 80% of potential losses on individual loans (as opposed to the standard 50%);
• Focus on working capital loans across the EU;
• Allowing for more flexible terms, including postponement, rescheduling or payment holidays.

By Emmanuel Duh