San Diego Union-Tribune (Sunday)
EUROPEAN LEADERS LOOK TO AVOID LAYOFFS
Nations vow support as lockdowns bring new closures
Faced with the prospect of mass layoffs coinciding with a second wave of COVID-19 and new lockdowns, European leaders are extending their commitment to generous, budgetbusting efforts to keep workers paid and employed.
The latest country to fall in line is Britain, which on Friday backed away from ending a government program the pays up to 80 percent of private-sector salaries for workers furloughed because of the pandemic.
Instead, the British Treasury will continue to subsidize wages for businesses told to close under the growing number of regional lockdowns. It will also offer more limited support to workers who have seen their hours reduced.
“We will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” said Chancellor Rishi Sunak, who for months had declared that Britain’s $50 billion furlough program wasn’t sustainable and needed to expire this month.
Britain follows Spain, France, Italy and others that have decided to continue expensive furlough programs far beyond the few months initially planned and budgeted for. In Germany, where the model originated, policymakers have extended their version all the way to the end of 2021.
“We will also need the furlough tool in the coming year,” German Labor Minister Hubertus Heil said at the end of September, unveiling another round of monthly unemployment figures that betrayed little pandemic-era trauma.
“With it, we secure jobs and give businesses the security to make plans. They need skilled workers in place so that they can get started again after the crisis and get the economy going,” Heil said.
The all-in European effort contrasts sharply with the turmoil in Washington, where leaders continue to squabble over a new stimulus package.
The basic model of the European programs, sometimes called short-time work, is that struggling employers can place their workers on either full or partial furloughs, while the government takes over most of the cost of their idled time. The aims are to keep paychecks flowing to anxious citizens, prevent otherwise sound businesses from going under, and avoid the need to hire and train new workers after a crisis recedes.
The programs have been credited with cushioning the shock of the pandemic. While the U.S. unemployment rate skyrocketed from 3.5 percent to 14.7 percent between February and April, the European Union rate has moved only modestly upward, rising from 6.5 percent in February to 7.4 percent in August, the latest month for which figures are available.
The costs are high. Germany may spend more than $35 billion on the first year of its furlough program, policymakers have said, and a yearlong extension could cost another $12 billion. A program that expensive, adjusted for the larger size of the U.S. economy, would carry a price tag of around $260 billion. Britain’s program, estimated to have cost $50 billion so far this year, would have cost around $390 billion in the United States. And Spain’s monthly furlough bill, $4.7 billion, would be $72 billion in an economy the size of the United States.