10 Tips On How The Coronavirus Has Changed The Labor Market

This Is How The Coronavirus Has Changed The Labor Market: More than three months of pandemic and confinement have already passed and the consequences of this social health emergency are beginning to be seen in Spain. How has it affected the job market in general? Which profiles have suffered the most?

From Newtral.es we review the affiliation data for May with respect to the previous months and we spoke with experts to analyze where we are going. They all agree that the type of contract most affected by the coronavirus has been the temporary one. In terms of age profile, young people get the worst of it and a gender gap is beginning to be seen in new affiliations.


In addition, there are concerns for how long the temporary employment regulation files (ERTEs) will last, a subsequent adjustment of staff and salaries, a misunderstood telework for those who can develop it, and the need to regulate this remote work model arises that until now is hardly used in Spain.

The setting is primed with temporary and young

Analyzing the affiliation data for the month of May with respect to those of the months of March and April, the Minister of Inclusion, Social Security and Migrations, José Luis Escrivá, highlighted some of the consequences that the coronavirus crisis has had on the market with which the experts consulted agree.

The adjustment (due to COVID-19) occurs mainly in temporary contracts. Between March 11 and April 30, 672,000 temporary jobs were destroyed and of these, only 130,000 have been recovered throughout May and June, according to figures provided by the ministry. In the area of ​​permanent employment, the adjustment has been less intense.

Will the COVID-19 emergency create more temporary employment seeing the existing uncertainty? Will employment become more precarious? As lengthy, because the uncertainty remains, it’s going to price extra to get better the preceding employment level, but the temporary nature is unfortunately installed in our economy: 90 out of every 100 contracts that are signed are temporary and in addition, 1 in 4 are for less than one week. More precariousness seems difficult to assume, laments the UPV / EHU Professor of Economics and director of the ISEAK Foundation, Sara de la Rica.

Another of the structural problems of our country and that Minister Escrivá defines as a tragedy is that of youth employment. And in these months of health emergency in Spain, the strongest falls in employment have occurred in the youngest, especially among those under 24 years of age.

But is it recovering faster in May and June in youth employment at least? Well, it seems not. The employment this is improving has an extra homogeneous pattern, which confirms that jobs were destroyed at all ages but especially in the youngest ones and the first ones who are reincorporating are not being proportionally the youngest, confirms the minister.

Young people in this crisis are suffering a double setback, in the opinion of Sara de la Rica. They had enormous difficulties to enter the labor market after the previous crisis, and now that it seemed that things were beginning to be better for them, many of them find themselves again unemployed and with great uncertainties. This is due to the enormous precariousness in which they work since they monopolize the majority of temporary contracts. That is why it is essential to end this situation and opt for more stable hiring from the beginning, as is the case in neighboring European countries.

They recover worse and there are less affected by ERTE

From the gender point of view and review the affiliation data, between March 11 and April 30, 423,000 female jobs and 524,000 male jobs were lost, of which only 46,000 were recovered in the case of them and 142,000 in theirs. So male employment is recovering better.

Regarding the temporary employment regulation files, the maximum number of workers protected by ERTES, with more than 500,000 companies affected, was on April 30, when it reached 3,387,000 million. However, on June 3, they were at 2,808,000. In other words, 587,000 workers have been activated throughout the month of May, according to Escrivá data.

The ERTES has been a very convenient tool in the face of an economic shock caused by a cause totally exogenous to the economy, such as the pandemic. It is a way of intervening in the labor market to avoid dismissal but these tools are very expensive economically, and therefore it is convenient that they last for a short time, says the Professor of Economics Sara de la Rica who also highlights that the encouraging data May where one in five people affected by ERTE have already gone to work.

De la Rica warns that supply chains need to work again so that the supply of goods and services from companies is normalized. And also demand, both intermediate and final demand, where consumption actually plays a fundamental role so that ERTEs do not end in EREs.

Some hopeful data

On June 2, the Minister of Inclusion, Social Security, and Migration stressed that the ten activities with the greatest job losses in March and April had already regained affiliation in the month of May inclusive of construction, the shoe enterprise, or sports associated with employment. At a press conference to analyze the membership data, Minister Escrivá insisted that from April 30 to June 2, more than 200,000 jobs have been recovered after the 948,000 that were destroyed between March 12 and 31 as to the consequence of the confinement measures by COVID-19. The advance of the de-escalation has encouraged the creation of jobs and the data indicate that according to the municipalities ‘ changing phase, the trend of growth in membership is ahead a few days, he added.

How do companies see their future?

It is difficult to make estimates for the future, but Randstad they have carried out a study in which they show the perspective that companies have for the coming months.

The report states that 80% of Spanish businessmen trust that they will fully recover from the coronavirus crisis before reaching the second half of 2021 and reveals that businessmen will hire an average of 3.3 temporary workers to reactivate their businesses during recovery after the pandemic.

Temporary workers have now been among the most affected, but they will also be those who will rejoin the job market before. Temporality, cost reduction, or dismissal facilities are measures that can be negative from the individual point of view of the affected worker, but positive from the aggregate point of view of the hard work market, says Pau Cortadas, professor of the Studies of UOC Economy and Business.

Regarding the recovery by sectors, Randstad points out that the health and pharmaceutical industry will be the ones that will experience a faster recovery, estimating that most companies will reach pre-crisis activity before the first three months of 2021. And they predict a full recovery in sectors such as accounting and legal services, insurance, wholesale trade, logistics, telecommunications, agriculture and livestock, and the chemical and food industries.

Construction, retail, automotive, air transport, hospitality, and much of the industry will see the full recovery of most of their companies delayed until well into 2022. 26.6% of those surveyed assure that it has already started its activity, while 15.3% do not know when it will normalize because it depends on the lifting of restrictions. 13.4% trust that they will be able to lift the blind normally during June, while 10.6% believe that it will be possible to do so in July and August.

Teleworking and ERTEs, the great allies

Asked withinside the identical Randstad survey approximately the measures completed in phrases of human assets for the duration of this fitness emergency, employers highlight teleworking and temporary employment regulation files (ERTE) as their great allies and those that will mark their future.

In fact, 50.5% of entrepreneurs have had to resort to teleworking and 42.6% to ERTEs to make their company’s activity sustainable. Other measures have also been granting vacations (11.5%), the suspension of hiring processes (11.2%) or recoverable paid leave (9.5%).

Looking ahead to the coming months, they highlight that the most important challenges they have to face are the management of ERTE and teleworking to keep the company operational, avoid significant financial losses, maintain the relationship with customers and suppliers and invest in the security health of its employees. And among the fears that companies have would be national economic uncertainty (63.5%), loss of turnover (43.7%), or economic uncertainty in their sector of activity (43.1%).

Workers affected by ERTE who have not yet received payment: the figures that do not match

Along the same lines, José Luis Escrivá, recently pointed out at a meeting of the Nueva Economía Forum, that the scheme to extend ERTE beyond June 30 must have important elements of flexibility, both in terms to maintain exemptions to companies and worker protection measures, as in the definition of sectors because although restrictions on mobility will largely disappear at the end of this month, there are sectors such as tourism and transport that will continue to be affected.

The Spanish Confederation of Business Organizations (CEOE) and the Spanish Confederation of Small and Medium Enterprises (CEPYME) also support extending and making the temporary employment regulation files more flexible. Let us remember that the Government and social agents closed an agreement to extend the ERTEs by force majeure until June 30 and negotiate in a tripartite commission how to fit this figure in the coming months depending on the sectors.

Will the coronavirus increase wage inequality?

The European Commission (EC) believes that the crisis generated by the COVID-19 pandemic may increase wage inequality and deteriorate the protection offered by minimum wages, already insufficient to reach the end of the month in some States. This is stated in a second public consultation launched

on June 3 by Brussels that proposes to establish common minimum requirements, either in a mandatory way with a community directive; or voluntary, through political recommendations to the States, to ensure a decent minimum wage in all countries.

The initiative, already announced in January by the European Commission, does not intend to set an equal minimum wage in all the countries of the Union but is concerned that in many countries it does not allow to make ends meet and proposes to correct the problem by introducing common criteria in all countries through mandatory legislation or non-binding political guidelines. European unions and employers may speak until September 4 to shape the final proposal to be presented by the Community Executive.

The Commission notes that the crisis could increase the demand for non-standard and precarious workers to reduce costs, which could aggravate the risk of poverty for these people, who in general already have lower hours and wages than those of permanent employees and warns that the crisis has hit particularly low-wage sectors, such as commerce and tourism.

There is a risk that the adequacy of the minimum wage will deteriorate in some Member States following the COVID-19 crisis. Wage inequalities could increase, as highly-skilled workers could be less affected by job and income loss than medium- or low-skilled workers say the Commission document.

The ‘pandemic telecommuting’ is not the best

We have gone from practically non-existent teleworking as was the case in Spain to full-time teleworking. That is why it is essential to understand that this pandemic teleworking that we have adopted is not a correct form of teleworking, explains Eva Rimbau, professor of Economics and Business Studies at the UOC.

COVID-19 has accelerated everything and currently, in the digital context, demands can become constant, as well as transversal, from different areas of the organization, not in a vertical chain, points out Mar Sabadell, also a professor at the UOC. We must learn to plan, improve the organization of digital work time, and set priorities.

In addition, pressure works against the worker, as Sabadell tells us. The context, the confinement, the fear of losing a job, extending hours to show our commitment and a culture of being present (ensuring that workers are connected) may not be helping, he warns.

For Pau Cortadas, professor at the UOC, telework should not be caused by a shock but through planning with clear objectives such as family conciliation or increased productivity or, why not say it, the reduction of costs associated with the presence.

And if we analyze the issue of care, where they are the ones who assume much more responsibility, now that the possibility of going back to work is open but that the children are at home with daycare centers and schools closed, I am sure that the reductions the shift will be almost exclusively for women (I hope I was wrong). And this, once again, comes from the gender asymmetry that exists in our country in terms of care, warns the UPV Professor of Economics, Sara de la Rica.

Regulating telework, the next challenge

I think that teleworking has been an unprecedented social experiment that we would never have tried in Spain in such a generalized way if it had not been for this pandemic, says, de la Rica. Without a doubt, it gives us lessons such as proof that excessive presence is not necessary, that it can be a good complementary element to face-to-face work, but that it is necessary to regulate it so as not to fall into slavery. A test of cotton has been passed, which is that it is possible to telework in certain profiles.

This has taught us that many trips for meetings are perfectly avoidable. New technologies allow many meetings to be carried out telemetrically and this can be a great advance in terms of time savings, and in terms of reducing travel, which is also highly sustainable from a climate point of view, continues this expert.

But is the Government working on regulation in this regard? You are right. In fact, the Ministry of Labor published on June 6 the public consultation prior to the elaboration of a normative project on the modification and elaboration of the conditions to provide work for others at a distance. This seeks to gather the opinion of citizens, organizations, and associations before the preparation and the deadline ends on June 22.

What will the future of employment look like in the medium term?

For Fernando Luengo, economist and retired professor at the Complutense University of Madrid, the future will be bleak. When the ERTEs end, there will surely be an adjustment in the workforce and also in salaries. Furthermore, this expert recalls the situation we had in Spain months ago of millions of unpaid overtime and overexploitation in some companies.

That is precisely why the regulation of telework should be one of the essential legs for the job to come. We must avoid that with this pretext we go a step further in the labor jungle law, adds Luengo.

For the UPV Professor of Economics Sara de la Rica, this pandemic will accelerate the technological changes that were already planned. Spain must take advantage of this moment to bet on a transformation in which two elements prevail.

In the first place, it is necessary to bet on technological change, generalizing automation to the entire productive fabric, but always putting people in companies and their adaptation to changes at the center. That is, to bet on R + D + A, where A is the necessary investment in Adaptation to people. This element cannot be left out of the equation of technological innovation, she explains.

And secondly, take advantage of the opportunity for Spain to participate in European Reconstruction projects, allying itself with the green economy, which will undoubtedly generate many jobs derived from both new uses of energy, and the expansion of the circular economy. There will be very important sources of financing for this transformation and we cannot let the opportunity pass, this expert concludes.

Originally published at https://exploremoney.net.

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