COVID-19 crisis has brought Europe's low wage sectors to their knees

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COVID-19 has wreaked havoc on Europe's labour markets, taking the heaviest toll on the lowest paid sectors and those involving a high level of human interaction. Whereas the possibility of working remotely and the government measures taken across Europe have managed to cushion the most severe blows by keeping people employed and businesses running, the EU and the Member States will have to take action to curb inequalities once the support policies are withdrawn

On 21 May, the European Economic and Social Committee (EESC) held a public hearing that looked at how the COVID-19 pandemic was affecting Europe's labour markets.

Organised by the EESC's Labour Market Observatory, the hearing explored the impact of remote working on employers and workers and delved into ways of regularising the right to disconnect. Panels in the second part of the hearing took a closer look at labour markets in low wage sectors.



The first panel was opened by Carlos Manuel Trindade, rapporteur of the EESC's recent opinion on the Challenges of teleworking, in which the EESC pointed to the need for more research to be carried out and for a long term view to be taken with the aim of harnessing the benefits and mitigating the risks of this form of work.

Following the health measures introduced by Member States, the number of teleworkers had skyrocketed to 34%, compared with only 5% in pre-COVID-19 times, according to a Eurofound survey.

The survey also showed that over 60% of people who have worked online during the pandemic would like to continue to do so several times a week once life returns to normal. Less than 20% would like to continue working exclusively from home.

The pandemic is going to change the way we work. We cannot put the clock back – the effects on the way we work will continue after the pandemic, said Alex Agius Saliba, MEP and rapporteur of the European Parliament's The Right to disconnect report.

If made EU law, Mr Saliba's legislative initiative would enable EU workers to be unavailable outside their working hours. It would also establish minimum requirements for remote working and clarify working conditions, hours and rest periods.

However, the initiative has not pleased everyone. Europe's employers, although not denying EU workers the right to disconnect, are adamant that the right should be regulated by collective agreements, negotiated directly between workers and employers, or their representatives, which are better suited to taking into account specific needs of companies and their employees.

We think it is a wrong approach for the EU to legislate on this issue, said Maxime Cerutti of BusinessEurope. We want to emphasise a strong role for autonomous social dialogue in this context.

ETUC's Isabelle Schömann said her organisation threw its support behind Mr Saliba's initiative. EU legislation and collective agreements would, she thought, only complement and enrich one another and it would be wrong to block one on account of the other. In addition, no European legislation directly addressed the right to disconnect.

We must seize this momentum. There is a need to act now; we cannot wait, she warned.



For John Hurley of Eurofound, telework had proved to be an important job saver during the pandemic. Countries with a higher incidence of working from home during the first COVID-19 wave had reported higher job security, though figures varied considerably between Member States.

However, as he pointed out, only a minority of jobs can be teleworked and most work is place-dependent, with 63% of jobs having some physical task requirement. Teleworking is also highly skewed towards people in high paid jobs.

Another crucial job saver were various government policies that had helped prevent important job or income losses. COVID-19 has led to a dramatic decline in economic activity, with a steep decline in working hours. However, employment has declined much less than GDP thanks to exceptional government measures to support it, noted Loukas Stemitsiotis, head of the Thematic analysis unit at the European Commission's Directorate-General for Employment, Social Affairs and Inclusion.

Furthermore, although GDP fell in almost all Member States, it was mainly absorbed by temporary layoffs or reduced hours. Exceptional wage compensation policies had also cushioned wage losses.

Mr Hurley referred to Eurofound research showing that close to four million employers and over 40 million workers in the EU had made use of such measures, meaning that more than 20% of the EU workforce had benefited from short time working or temporary unemployment allowances at some point during the first wave of the pandemic.

The main challenge now is to tackle possible future increase in inequality once these policies are withdrawn, Mr Stemitsiotis warned.

However, despite the exceptional policies put in place by Member States, low paid workers had disproportionately borne the brunt of the crisis. Compared with the 2008 crisis, in which middle income male jobs such as those in manufacturing and the construction industry had suffered the most, COVID-19 most heavily impacted low paid female jobs. The sectors worst hit by the pandemic were the accommodation and travel sectors and domestic services.



The sector providing personal and household services (PHS), such as care for the elderly, people with disabilities and children, had 75% of their services cancelled. Half of PHS organisations were closed and 45% of their workers reported a reduction in their working hours. 82% said the crisis had impacted their health. The PHS sector employs 9.5 million workers or 5% of EU-27 employment, and 91% of its workers are women. 

Although Member States have put in place a variety of support measures, these are temporary and need to be translated into a long term commitment to the sector, revaluing domestic and care work occupations so as to reflect their important social contribution, said Aude Boisseuil of the European Federation for Family Employment & Home Care (EFFE) and Aurélie Decker of the European Federation for Services to Individuals (EFSI).

Accommodation and food services had also been hit. Before the pandemic, the European hospitality sector generated 12 million jobs per year and numbered two million companies, of which 90% were micro-enterprises, and contributed 5% of the GDP to the EU economy.

In 2020, the sector was on its knees, with companies reporting 80% to 90% losses in turnover. Figures for December 2020 saw the European average in hotel stays drop by 80.4%. Estimates point to a possible loss of up to 6.4 million jobs for tourism.

According to Marie Audren from Hospitality Europe (HOTREC), rebuilding the hospitality sector would require both short term and long term government measures, such as state aid or allocation of funds from the SURE mechanism and cohesion funds. Many EU countries had already introduced reduced VAT rates for businesses in the sector.

Almost a third of workers in the hospitality sector were relatively unskilled, and 20.2% of the sector's staff were younger than 25. Retaining and attracting talent would be a priority for the hospitality sector in the post COVID-19 period, with emphasis on upskilling and reskilling the workforce with the help of various EU funds, as well as on apprenticeship schemes and lifelong learning.

The culture and creative sector had also suffered significant losses on many fronts.

Economically, it is one of the most damaged sectors and as such is a priority in terms of benefiting from the Recovery and Resilience Fund, said Arthur Le Gall, from KEA European Affairs, a policy design and research centre specialising in the culture and creative industries. By way of example, he cited the European Audio Visual Observatory, which estimated EU recorded cinema box office losses at some 70% compared with 2019, and the Federation of European Publishers, which put sales losses at 90%.

Jobs in the sector were unstable, with artists often earning below the minimum wage or working part-time, with no open-ended contracts.

We have not seen sufficient measures in place for the CC sector and there has been a lot of disparity between countries, said Mr Le Gall.

Mark Bergfeld of UNI Europa, which represents service sector workers, who are generally at the bottom of the pay scale, said we needed to think about how work in low wage services could be revalued. He pointed to the anomaly that most of these workers were most unlikely to receive on the job training, making it difficult for them to actually progress or advance in their career.

We need to start thinking about ways to tackle inequalities that have emerged in the crisis. This requires political will and investment and cooperation across all the parties, he said.

Concluding the event, Lech Pilawski, president of the EESC's Labour Market Observatory, highlighted the importance and diversity of the problems that would afflict the labour market following the COVID-19 crisis.

Laurentiu Plosceanu, president of the EESC's Section for Employment, Social Affairs and Citizenship, said that the challenge ahead was to tackle possible future inequalities: Excessive job destruction has been avoided but we are just starting to feel the effects of the pandemic. We need to try to see the bigger picture from the labour market perspective in order to better understand trends and improve the level of predictability. This will enable employers, employees and social partners to better adapt to the unknown future that awaits us.