While billionaires are getting increasingly richer during the Covid-19 crisis, unemployment is hugely rising. In the USA alone, the unemployment rate rose to 14.7 %. Europe also suffers from the social and economic consequences of the Covid-19 crisis, whereby the impact on countries and sectors is varying strongly. According to the Spring Economic Forecast 2020 of the European Commission, unemployment will have risen to 9 % by the end of 2020 – which would be equivalent to 19.6 million people in absolute numbers.

EU-wide rising unemployment and risk of poverty

According to a Study by Eurofound, which was published at the beginning of May, about half of employees in Europe had their working hours reduced. Their number is particularly high in Italy, France, Cyprus and Rumania, whilst the Nordic countries are less affected by these reductions. According to the European Trade Union Institute, at the end of April, 27 % of employees across Europe were in short-time work. Apart from that, the financial situation of 40 % of Union citizens has become worse since the beginning of the pandemic – half of these find it difficult to pay their bills. The situation of job seekers is even more dramatic: 82 % have a problem meeting their obligations. By creating the SURE (Support mitigating Unemployment Risks in Emergency) tool, the Commission hopes to prevent the situation from deteriorating further. The wish to continue protecting the interests and rights of employees as well as possible requires the strong involvement of their Representatives. European trade union representatives called on EU Commissioner Schmit to make improvements in view of information, consultation and participation of labour representatives.

Looking towards Austria

In Austria too, unemployment figures have risen. About 517,200 people were out of a job in May 2020, approximately 43,900 attended training courses and 473,300 were registered as unemployment with the AMS (Austrian Public Employment Service). Even if, compared to May of the previous year 2019, this is an increase of unemployed and training participants of 50.7 % – the short-time work system, which was successfully negotiated by AK and ÖGB, prevented the situation from deteriorating even further and the rise of unemployment could be significantly mitigated.

A study of AK Vienna has now shown how successful the corporate social partnership has been during the crisis. For the online survey just under 500 labour representatives in large Austrian limited-liability companies were questioned. A pleasant picture regarding corporate social partnership becomes apparent: So far, in 80 % of cases it has been possible to avoid job losses. Every second company counted on intercorporate short-time work. Apart from that, many companies encouraged their staff to take accumulated leave and overtime hours as well as imposing a recruitment freeze. This has been, also in view of the sharp collapse in demand and the loss in revenue associated with it - every 6th corporations expects a loss in revenue of more than 50 % for 2020 – a great success. The liquidity reserves, which originate from previous boom years, lead to a better starting position for Austrian limited-liability companies, compared to SMEs.

However, under no circumstances shall the better liquidity situation of limited-liability companies result in a payment of dividends. The AK survey reveals that in accordance with statements by labour representatives, the supervisory boards of 37 % of limited-liability companies decided against paying a dividend; 10 % will see a cut of profit withdrawals. Some companies are currently discussing a payment of dividends (28 %), it will remain constant for 22 % and increase in case of 3 %. The European Trade Union Confederation urged against a dividend payout. Companies should prioritize saving jobs and paying wages and salaries over shareholder interests. While millions of workers were worried about their future and small businesses had a particular hard fight on their hand, the distribution of dividends in case of companies, which are receiving state aid, is not justifiable. The ECB too has come out against the payment of dividends at least until the end of October 2020.

The social partnership model shall continue

In the end, to successfully introduce short-time work in Austria and cushioning the rise of unemployment also required the positive cooperation between employee representatives and company managers. According to the employee representatives, this has, all things considered, worked well and in many cases led to the rapid implementation of teleworking solutions and health measures in companies. Hence, it has once again been demonstrated that social partnership can achieve good results for all participants. Now, an attempt has to be made to get as many employees as possible out of short-time work and unemployment as quickly as possible. Furthermore, new impetus born out of the crisis in respect of occupational health and safety and health standards should also be applied and good framework conditions for new forms of organising work, for example by working from home, should also be driven forward. With regard to working from home , it is probably necessary to introduce statutory special provisions – clear rules at company level are required to prevent employees from being disadvantaged. Once the economy is on the road to recovery again, the social partnership, which worked so well during the crisis, should become a ”future-oriented social partnership”: Its priority issues include securing the livelihood of business and jobs, new forms of organising work, securing high health standards, chances of digitalisation as well as sustainable economic management and climate protection. 

Further information:

AK EUROPA: Short-time work during the Coronavirus crisis: Austria – an example to others

AK: Coronavirus: Social partnership prevents job losses

A&W Blog: Suddenly working from home: opportunities, risks and regulatory requirements

Arbeit & Wirtschaft Magazine: Labour market: the collapse