In some countries, you won’t dare to touch a radiator. The cost of living crisis has lead to approximately 8 million people in the UK who can’t pay their bills, while other countries are facing a similar fate. The energy prices have skyrocketed, in large part due to the Ukraine war, and Russia’s subsequent suspension of natural gas supplies, which covers approximately 40% of Europe’s gas consumption.
It has lead to the IMF lowering its 2023 forecast for global growth in its latest World Economic Outlook (WEO). For the eurozone, it revised its forecast for 2022 on the back of stronger-than-expected Q2 growth in southern economies, spurred by tourism as pandemic-related restrictions eased. “Winter 2022 will be challenging for Europe, but winter 2023 will likely be worse,” said the IMF. “The energy crisis, especially in Europe, is not a transitory shock. The geopolitical re-alignment of energy supplies in the wake of Russia’s war against Ukraine is broad and permanent.”
More than 10,000 temporary unemployed
With energy bills rising to unaffordable levels, the first two hundred Belgian companies have already registered for an temporary unemployment system, according to De Standaard. And more could soon follow. The Belgian scheme would allow for companies to rubber stamp that energy costs allow for more than 3 percent of the production cost of the process. Statistics from Belgian’s national employment office (NVA) show that the companies combine for temporary employment for a total of 10,684 employees. That’s a rapid rise compared to six days earlier, when the total number was only 1,175 employees spread across 44 companies.
Statistics from Belgian’s national employment office (NVA) show that the companies combine for temporary employment for a total of 10,684 employees.
In recent weeks, several large industrial companies in Belgium have made it clear that they will either reduce or even shut down their production due to the high energy prices. These included a factory of the Norwegian chemical group Yara, of ammonia production in Antwerp and the a branch of Aperam, a producer of stainless steel. The long-erm impact on employment remained unclear, however. Only Aperam indicated that it wants to completely close its factory during the autumn holidays. This means that the nearly 1,200 employees (workers and employees) will fall back on unemployment benefits for a week.
Unemployment numbers still decreasing
Meanwhile, Eurostat estimates that 12.921 million men and women in the EU (of whom 10.966 million in the euro area) were unemployed in August 2022. Compared with July 2022, the total number of unemployed decreased by approximately 52,000 in the EU and by 30,000 in the euro area. Compared with August 2021, unemployment decreased by 1.682 million in the EU and by 1.358 million in the euro area.
‘Impossible to find a balance’
Geert-Jan Waasdorp, labour market expert and CEO of Netherlands-based talent intelligence supplier Intelligence Group foresees labour markets not functioning properly as a long-term effect. “The market is already tight and it is impossible to find a new balance”, he says. “There is a question of moral hazard among companies and employees. It takes away entrepreneurship. Encourages abuse and prevents innovation. Saving these jobs in a labour market that’s already too tight makes the market even more difficult. And in the long run, it could see people, becoming mentally and economically, become less stable.”
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