Page 43 - COVID-19: The Great Reset

than anywhere else. In April 2020, the US unemployment rate had
risen by 11.2 percentage points compared to February, while,

during the same period in Germany, it had increased by less than
one percentage point. Two reasons account for this striking
difference: 1) the US labour market has a “hire-and-fire” culture
that doesn’t exist and is often prohibited by law in Europe; and 2)

right from the onset of the crisis, Europe put into place fiscal
measures destined to support employment.

In the US, government support so far (June 2020) has been
larger than in Europe, but of a fundamentally different nature. It

provides income support for those who lost their job, with the
occasional result that those displaced are better off than in their
full-time jobs before the crisis. In Europe, by contrast, the
governments decided to directly support those businesses that
kept workers formally “employed” in their original jobs, even when

they were no longer working full time or not working at all.

In Germany, the short-time working scheme (called Kurzarbeit
– a model emulated elsewhere) replaced up to 60% of earnings
for 10 million employees who would have otherwise lost their jobs,

while in France a similar scheme also compensated a similar
number of workers by providing them with up to 80% of their
previous salary. Many other European countries came up with
similar solutions, without which lay-offs and redundancies would

have been much more consequential. These labour market
supporting measures are accompanied by other governmental
emergency measures, like those giving insolvent companies the
possibility to buy time. In many European countries, if firms can

prove that their liquidity problems were caused by the pandemic,
they won’t have to file for bankruptcy until later (possibly as late as
March 2021 in some countries). This makes eminent sense if the
recovery takes hold, but it could be that this policy is only

postponing the problem. Globally, a full recovery of the labour
market could take decades and, in Europe like elsewhere, the fear
of mass bankruptcies followed by mass unemployment looms
large.

42