Lavoro Covid Morning Future
The Case 21 February Feb 2021 0840 21 February 2021

A year of Covid: its impact on employment

One year ago saw the outbreak of the pandemic in Italy. Employed, NEETs, unemployed: key trends and figures 12 months after the arrival of the virus. At least 444,000 fewer jobs

  • ...

The virus is showing no signs of slowing down. According to the latest data from the World Health Organization (updated on 12 February 2021) there have been 107,252,265 confirmed cases of Covid-19 in the world since the start of the pandemic, with 2,355,339 deaths. Looking specifically at Europe, there have been 36,351,772 confirmed cases with 805,485 deaths. An analysis of the epidemiological data country by country shows that in the United Kingdom there have been 3,985,165 confirmed cases with 114,851 deaths, in France 3,337,048 confirmed cases with 78,965 deaths, in Spain 2,989,085 confirmed cases with 62,295 deaths, and in Germany 2,288,545 confirmed cases with 61,675 deaths. Italy has seen 2,636,738 confirmed cases with 91,273 deaths. This puts Italy second bottom in Europe for infection rates, above only Greece, but at the same time, it has the second highest number of deaths behind the United Kingdom, which has 10 million more inhabitants. However, it should be stressed that the current count we have does not include the variants of the virus which have not yet been detected.

According to the analysis of the National Observatory on Health Status in Italian Regions at the Catholic University in Rome published at the end of the year, there is a big difference highlighted in the incidence of the virus compared to the mortality rate in Europe. Italy and the United Kingdom top this miserable league table with the highest rates (both 3.5%), followed by Spain (2.7%) and France (2.4%). Among the major countries, Germany is faring best with a fatality rate of 1.6%.

Global unemployment: dramatic rise

This enormous health crisis, accompanied by the fairly drastic lockdowns imposed by the various countries in an attempt to tackle it, has had a powerful impact on the world of work. Estimates provided by the International Labour Organization (ILO) indicate an increase in global unemployment from 5.3 million to 24.7 million people. This would add to the 188 million unemployed in the world who had already been recorded in 2019.

The ILO also reckons that between 8.8 and 35 million more people will be affected by in-work poverty worldwide. The effects of the crisis on hours worked and income have been enormous. For example, updated estimates predict for Q2 2020 a global reduction in hours worked of 17.3% (compared to the number of hours worked in Q4 2019). This reduction amounts to 495 million full-time jobs. This situation seems to be corroborated by the data from the United States where, according to Eurostat, in 2020 the ranks of the unemployed grew by 4,897,000, marking a 3.1% rise compared to 2019.

In Italy, Covid has already been responsible for almost half a million people losing their jobs

As far as Italy is concerned, the latest findings from Istat for December 2020 indicate 101,000 fewer employees than in 2019, including 99,000 women. Year on year, there are 444,000 fewer workers than in 2019. The employment rate is down 3.2% compared to 2019.

Redundancy freeze and distorted unemployment figures

Eurostat notes that there were 2,479,000 unemployed in Italy in December 2019, exactly one year later, in the midst of the Covid-19 pandemic and with the heavy repercussions affecting the economy, the number of people out of work (out of the total population of working age and actively seeking employment) fell to 2,250,000.

The unemployment rate was 9.6% a year ago; it is currently 9%. A seemingly positive figure, therefore, bucking the trend in the rest of the European Union. In Germany, as we said, the unemployment rate rose over the same period: from 3.3% to 4.6%, with the total number rising to 2 million, compared with around 1.5 million in December 2019. In Spain, the unemployment rate spiked to 16.1% compared with 13.7% a year ago, which converts to 3.7 million unemployed, corresponding to roughly 560,000 more. There has also been a rise in unemployment in France, not on the same scale, but still high: about 185,000 on an annual basis.

What explanation is there for Italy bucking this trend? The figures are distorted by the redundancy freeze. Initially, the "Cure Italy" Decree (Legislative decree no. 18/2020) was introduced by the Government from 17 March 2020 to 16 May 2020 to freeze individual redundancies for justified business reasons, collective termination procedures and any pending procedures initiated after 23 February 2020. This measure has been gradually extended and is currently due to expire on 31 March 2021. Italy is the only country in Europe to have deployed this type of instrument.

"It is estimated that the ban on terminating contracts for economic reasons, which has been in force for a year now, has, so to speak, 'frozen' 400,000 redundancies," explains employment lawyer Pietro Ichino."These are all people who should now consider themselves as basically unemployed, even if, officially, their employment contracts are still valid. This ban is extremely detrimental to these people because it will delay the time when they begin to take action to find a new job, not to mention that it is reducing their employability every month." Professor Ichino believes the wrong choice was made: "We pretend not to notice this unemployment, but it has already got out of hand. What is urgently required is to stop covering this situation up and to take the problem seriously. The government should allocate the money we are spending on a bottomless and hopeless income indemnity fund to increase, if anything, the duration and amount of the unemployment benefit for those who will be dismissed after 31 March, thereby ensuring 80% for everyone, without a cap or with a cap which is much higher than the current amount of around 1,200 euros per month. It should also launch the guidance and training courses necessary to direct those who have lost their jobs to companies which are currently looking for people without any success in finding them. Or, at any rate, towards the streams of ordinary jobs being recruited for, which are still in the hundreds of thousands every month. There is no reason why those who have lost their jobs should consider themselves doomed to permanent unemployment."

Therefore, looking at the unemployment figures if the ban is halted, the picture changes dramatically, albeit the estimates are conservative, with an increase of 400,000 in new unemployed among employees alone, creating in Italy a surplus balance of 178,000 unemployed.

Young people devastated by the virus. Italy – the home of the NEETs

Still according to Eurostat data, the coronavirus crisis has therefore caused an unprecedented loss of income from work. The impact has been particularly tough for already disadvantaged workers, such as young people. Before the pandemic, the unemployment rate in the EU for young people aged between 14 and 24 was 25.7%. In December 2020, the unemployment rate was 29.7%, an increase of 4% year-on-year.

"If the unemployment rate for the under-30s is three times the general unemployment rate, this difference is entirely due to the very serious lack of educational and careers guidance services in Italy," explains Pietro Ichino. "Young people make the crucial choices for their future 'blind'. In other words, they don't know, even in vague terms, what lies ahead for them in the labour market."

The Jobless Society Forum of the Fondazione Feltrinelli, which is involved in analysing the transformations taking place in the world of work linked to Industry 4.0, i.e. relating to artificial intelligence, has been collecting data and details about the situation, compiled into the annual report just released under the title 'Lavoro: la grande trasformazione' [Work: The major transformation], which has highlighted how the unemployment rate for people between the ages of 15 and 24 in Italy will exceed 33%, almost three times higher than the European average of 12.5%. This picture must be completed by the worrying number of people who are non-active, known as NEETs (Not in Education, Employment, or Training), which would be at a rate 40% for young people, along with the growth in youth unemployment. The improvement recorded between February 2014 and February 2020 was completely wiped out by the drop which occurred between February and June 2020. Italy is the number one country in Europe when it comes to the mismatch between the suitability of the job obtained in relation to the training pathway. In Italy, 20% of employees are overqualified, with 30% of them having degrees in STEM disciplines (Science, Technology, Engineering and Mathematics). Compared to the rest of Europe, we have very few graduates, but despite this, their low numbers in our country do not improve their prospects. In the last 15 years, the unemployment rate among German graduates in the 25–39 age group has fluctuated between 2 and 4%, while the rate for Italian graduates has been between 8 and 13%.

Going from forecasts to specific data, the picture is no less gloomy. NEETs in Europe, according to the European Commission's quarterly employment report, are at a rate of 11.6% across the EU, up 1.8% on 2019.

Italy tops the table with 20.7%, followed by Spain with 15.1%. On the other hand, all other European countries are below 15%.

"Responsibility for this deadlock in Italy lies with the regions, since they have exclusive legislative and administrative jurisdiction when it comes to educational and careers guidance services", explains Pietro Ichino. "On the other hand, it also said that an effective educational and careers guidance service which can reach out to every young person leaving at the end of each academic cycle – as happens in the countries of central and northern Europe – can be achieved only when those responsible for running the service are exactly familiar with the quality of the academic and training courses which may be recommended to those concerned. In the case of training, it is vital to know the consistency ratio with the employment opportunities actually achieved by those who have benefited from it. This is also part of the new system which must be built almost from scratch, taking advantage of the extraordinary resources which will be made available by Brussels with the Next Generation Plan."

70.3% of the jobs lost in Italy done by women

Yet again, Istat highlights that in Italy there are 9,530,000 working women, marking an employment rate of 46.8%. In 2019 there were 9,842,000 women working and the rate was 50%. It means that 2020 saw a 3.2% drop in female employment, resulting in 312,000 women losing their jobs in a year.

According to other data, including from Censis, this rate of female employment puts Italy bottom among the European countries, led by Sweden, where the rate is 81.2%. Italian women also fall way behind the male employment rate of 75.1%.

"This is down to the fact that more women than men have fixed-term employment contracts, which have been decimated by the current crisis," adds the professor, "If we really want to increase the female employment rate and improve the quality of jobs, we must, first and foremost, invest in family services, which make it easier for mothers to decide whether to continue or return to work. It would also be necessary to launch a great 'positive action' aimed at breaking the vicious circle that characterises our 'Mediterranean balance', where women are relegated to a position of inferiority compared to men in the fabric of production and, even before that, in the labour market."

A general picture is presented, which has some desperate aspects if we drill down to a detailed analysis of the Censis data on unemployment instead. In the last year, the unemployment rate in Italy has been 11.8% for women. But this figure rises to 34.8% among the 15-24 age group. These figures are excessive if you take the European average, which stands at 7.6% in 2020, an increase of 0.5% compared to the previous year.

"The only possible solution is a sharp reduction in the tax burden on women's earned income," explains Pietro Ichino. "Economists agree that supply and demand for female labour are much more variable than those for male labour, thereby making them much more responsive to a tax incentive. The reduction in personal income tax could be explicitly described as a 'positive action' intended to last until a female employment rate of 60% has been achieved, an objective which Italy has committed to achieving under the 2000 Lisbon Treaty. This kind of measure would be perfectly legitimate from an anti-discrimination legislation perspective, precisely because it is aimed at correcting systemic discrimination, and would also have a very positive impact on the subdivision of domestic chores between husbands and wives."

Sectors hit hardest by the crisis

There has been a significant slowdown in sectors such as hotels, catering, tourism, as well as general and sporting events. These are precisely the sectors where the contraction of the labour market is occurring. According to Istat's report on the situation of and prospects for companies in the Covid-19 health crisis, released in December 2020, the loss of employment is borne almost entirely by the service sector: this macro area of the national economy has accounted for almost all the departures from the labour market in the last year (96.3% of the total), although its contribution to the employment rate is smaller (69.5% of Italians are employed in the service sector). On the other hand, this industry is still bearing up which, despite the extremely heterogeneous nature of its different sectors, has seen its numbers fall by 0.6%. This is in contrast to the agricultural sector, which is contracting by 2.4%.

The Salary Report from ODM Consulting offers a different outlook on what happened in 2020 through the analysis of salaries. While, overall, there is a "simple" interruption in the wage growth trend, if you look within the various sectors, you can see clearly who are the winners and losers of the "lockdown economy". According to the report, the sectors which have suffered the least impact on pay levels as a result of lockdown are the following: couriers/hauliers/logistics, large food distribution, pharmaceuticals, food, electricity, gas and water. In these sectors there is an average increase of almost 600 euros, with a peak of almost 1,000 euros in the pharmaceutical industry. On the opposite side, we find the following sectors, which have been damaged most in terms of wages, by forced closures to contain the pandemic: retail, clothing/fashion industry, public establishments, hotels, textiles. These sectors are seeing an average decrease in wages of more than 300 euros, with a drop of almost 500 euros in the retail sector.

It should also be noted that, according to the Istat report on the situation of and prospects for companies in the Covid-19 health crisis, 32.4% (with 21.1% of employees) report operational and sustainability risks to their business and 37.5% have requested public support for liquidity and credit, obtaining it in 80% of cases. The spread of the sale of goods or services via their websites has almost doubled, affecting 17.4% of companies.

Italy's SMEs facing challenge from the virus

Small and medium-sized enterprises (SMEs) in Italy are the backbone of the employment sector. According to the Cerved SME 2020 Report, the turnover of SMEs is expected to decline in 2020 and early 2021 by between 11% and 16.3%. The data from Payline, the database which collects information on the payment habits of more than 3 million Italian companies, offers a real-time pulse check on the state of economic and financial health, indicating that the difficulties faced by SMEs have been strongly concentrated during the lockdown phase. The share of outstanding invoices gradually increased from 29% in January 2020 to a peak of 45% in May, and then dropped in June and July (37%), but remained well above pre-Covid levels. The Cerved Group Score Impact, which estimates the impact of Covid-19 on the probability of Italian companies defaulting, indicates that the long phase of strengthening SMEs will stop due to the pandemic and that the number of SMEs "at risk" could almost double from 8.4% to 16.3%. A simulation carried out on all capital companies (730,000, with a base of 10.2 million employees, or 42% of employees in Italy) highlights that, without the prospects of a rapid return to growth, the ramifications for employment and investment could be significant. At full capacity, the companies analysed could reduce the number of workers by 769,000 units (about 7.5% of the employment base employed by these companies at the end of 2019), due both to the most fragile companies exiting the market (135,000 workers affected), and to the adaptation of the workforce to the reduced turnover (633,000 employees). Projecting this estimate to cover the total number of private companies – including partnerships and sole proprietorships – 1.4 million workers could lose their jobs (8.3% of the total). In the worst-case scenario, with new blanket lockdowns, 1.1 million jobs would be lost in capital companies (-10.5%). In all private companies this number would reach 1.9 million (-11.7%).

The year of Covid has also become the year of remote working

In Italy, on 1 March 2020, a decree was issued that specified the methods of access to remote working, then confirmed by the subsequent provisions issued to tackle the crisis. According to the Istat report on the situation of and prospects for companies in the Covid-19 health crisis, the rate of use of remote working, as well as its spread, differs between the various sectors, although it falls within a common trend between the different activities. In general, the use of remote working/teleworking seems linked to the developments anticipated in the health crisis: companies in all macro-sectors plan to progressively increase the proportion of staff involved in this in the latter part of 2020, and then reduce it – without however returning to the initial levels – during the first three months of 2021.

The incidence of remote workers also appears to be influenced by the specific characteristics of production processes: during the peaks expected in November-December 2020, it reached 20.1% in industrial activities, 25.0% in construction, 30.8% in commerce, 41.2% in services. Taking a closer look at the figures, in the final months of 2021, this method of working could involve more than half of the staff in the consulting and company management sectors, publishing and broadcasting, advertising/marketing, telecommunications, air and sea transport, and more than 60% of staff in travel agencies, IT consultancy firms, R&D and recruitment services. On the other hand, in traditional or large-scale industrial sectors, such as leather, paper, metal products (but also rubber and plastic) and in personal care services such as residential social care, companies do not expect to have any more than 15% of their staff working remotely. In terms of scope, the use of remote working has been and will be more extensive as the size of companies increases, regardless of the reference sector.

Income indemnity fund never used so much. Due to Covid in 99% of cases

The Observatory on authorised hours for the Wage Guarantee Fund has been published with the data for December 2020. During this month, 306,892,434 hours were authorised. 99% of the hours for the ordinary and exceptional Wage Guarantee Funds and for solidarity funds were authorised with "Covid-19 health crisis" given as the cause. The hours for the Wage Guarantee Fund authorised in December 2020 were 104,573,954 and refer almost entirely to "Covid-19 health crisis" as being the cause, marking an increase of 1,095% compared to December 2019 when the authorised hours had been 8,751,012. The number of hours for the Extraordinary Wage Guarantee Fund authorised in November 2020 was 14,645,734, marking an increase of 94.2% compared to the same month in 2019 (7,541,385 hours). The responses from the Exceptional Wage Guarantee Fund were equivalent to 70,143,383 hours authorised in December 2020, marking an increase of 1,165,459.7% compared to the same month in 2019 when 6,018 authorised hours were recorded. The number of hours authorised in December 2020 in the solidarity funds was equal to 117,529,363, marking a decrease on the previous month of 9.1%, but an increase of 31,785.8% compared to the hours authorised in December 2019 (368,595 hours).

Work decreases and accidents also fall

As was to be expected, with the decrease in work, the rate of accidents is also slowing down. In the first 10 months of 2020, 421,497 incidents were reported to Inail (National Institute for Insurance against Accidents at Work), roughly 113,000 fewer, compared to 534,314 in the first 10 months of 2019 (-21.1%). This decline occurred even though reports were made in 2020 of accidents at work due to Covid-19 infections, which account for about 16% of the total since the beginning of the year. There were 1,036 reports of fatal accidents at work submitted to Inail in the first 10 months of this year. Although the numbers are provisional, this figure already shows an increase of 140 cases compared to 896 incidents recorded in the same period of 2019 (+15.6%). However, the increase is influenced by the deaths which occurred and were registered as of October 31, 2020 due to Covid-19 infection in the workplace, accounting for roughly a third of the deaths reported to Inail since the beginning of the year. Finally, the number of reports about occupational illness registered by Inail in the first 10 months of 2020 was 36,619, 14,436 fewer than in the same period of 2019 (-28.3%). This decrease is mainly influenced by the number of reports submitted between March and July 2020 compared to the same period of 2019. The largest decrease was recorded in April (-87%). This is followed by May (-69%), March (-40%), June (-29%) and July (-18%), while September, like January, shows a drop of more than 5% and October of 17%. In August, on the other hand, there was a modest increase of 1% compared to the same month of 2019, while February had ended with a rise of 17%.

 Scelto per te