MNI POLICY:  Boost Skills To Beat Post-Crisis Jobs Dip - Study

Euro area structural unemployment could increase due to mismatches between existing employment skills and those required to fulfill post-Covid crisis job needs, an article published by the European Central Bank in its economic bulletin has argued.

Furloughs and short-time work temporarily cushioned the pandemic's effects on the labour market , according to the article, whose authors included Robert Anderton and Vasco Botelho. Yet it remains "unclear" what proportion of workers still taking advantage of such schemes will return to normal working hours, and how many will lose their jobs.

Further scarring and divergence between euro area economies' labour markets are possible, they add, with labour reallocation needs expected to increase the longer the pandemic persists, and amid possible structural shifts in demand.

"The COVID-19 shock is also boosting the automation and digitalisation process, and the skills content of existing jobs may need to be upgraded, which may increase the mismatch in the labour market," the authors of The impact of the COVID-19 pandemic on the euro area labour market write.

"Greater skills mismatches and more geographic dispersion in the unemployment rate were a persistent outcome of the previous crisis and led to an increase in the average duration of unemployment, which can eventually lead to higher structural unemployment.

"In this context, job retention schemes could combine employment protection with training provision with a view to facilitating restructuring and supporting the upgrading of skills."

The article's authors also included Agostino Consolo, Antonio Dias da Silva, Claudia Foroni, Matthias Mohr, and Lara Vivian.