Three lessons for the labor market that COVID-19 teaches us

The impact caused by the COVID-19 crisis on the labor market, and the measures the Government has taken to alleviate it, leave three great lessons.

These are the three great lessons of the coronavirus crisis for the labor market.

We must learn to avoid temporality

The measures of flexibility in the labor market applied by the Government could be working efficiently if it were not for the fact that we have excessive temporary employment. Given the conjuncture nature of the crisis, temporary measures have been taken to prevent the destruction of jobs …

  • Blocking layoffs (rather making them more expensive).
  • Promoting adjustment measures through the organization of working time (recoverable paid leave), the suspension of the employment contract, and the reduction of the working day, with the complement of unemployment benefit during non-work times.

Thus, an attempt is made to tackle economic paralysis without loss of employment, putting into operation the “German model”, included in the 2009 labor reform.

Despite these measures, unemployment increased in March 2020 by 303,265 people, and affiliation to social security fell by 898,822 contributors between March 12 and 31 last.

This destruction of employment is due, above all, to the termination and non-renewal of temporary contracts. According to social security data, the percentage drop in membership in permanent contracts has been 1.92%, while the percentage in relation to temporary contracts reaches 17.30%.

Having an excessive weight of temporary contracts in the labor market means that, when the bad moments of the economy come, there is a strong destruction of employment, although the mechanisms of internal flexibility are working. So the first lesson from this crisis is: we must do something bold and quick to limit excessive temporary hiring in our job market.

Learn to better protect against unemployment

The second lesson is related to unemployment protection. To the existing benefits and subsidies have now been added …

  • The extraordinary benefit for cessation of activity for the self-employed.
  • The recognition of unemployment benefit, even if it lacks the necessary prior contribution in an ERTE situation.
  • The extraordinary allowance for lack of activity, for employees in the family home.
  • The subsidy for the end of a temporary contract lasting less than two months, for workers with no income.

The application of these “patches” shows that the current unemployment protection system is insufficient to provide the necessary coverage in situations of extreme crisis, especially for the most vulnerable workers, dependents or self-employed workers.

Although universal basic income raises many doubts, at a time like this it may be the fastest, most extensive and least bureaucratic option to provide coverage to those affected by the crisis in the most vulnerable situation.

This is the second lesson of this crisis: if in times of extreme crisis it has proved inefficient, we must review our unemployment protection system and provide ourselves with an alternative income system to income from work.

Learn to telework

The third lesson has to do with teleworking. Although with outdated regulation and a very presenteeist work culture, the expansion of COVID-19 and the subsequent confinement have made workers join teleworking.

Thousands of them are already working from home, perhaps hastily and poorly organized. However, this crisis has been the eventuality necessary to come into contact with a type of work that, like everything, has its pros and cons. Among its benefits, it saves time on the move and avoids the urban pollution that these entail.

On the dark side, teleworking has exposed the digital divide: homes without connection or without terminals, people whom due to age or lack of digital skills cannot do so, and companies that, due to size or scarce technological transformation, do not have the tools to implement it.

The third lesson is that teleworking is possible. Of course, we must improve processes, close the digital divide and take advantage of the advantages it offers in the fight against climate change, in the sovereignty that workers gain over their place and time of work and in cost savings for companies.

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Roger Walker

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