Mass layoffs starting, but no skyrocketing unemployment expected

Business

Large companies like Booking.com, Damen Shipyards, NS and KLM have announced coronavirus crisis-necessitated reorganizations, with thousands of jobs being cut. And more are expected to follow. But that does not mean that unemployment in the Netherlands will skyrocket, Sandra Phlippen, chief economist at ABN Amro, said to Financieele Dagblad.

The unemployment rate in the Netherlands rose to 4.3 percent in June. “Here is not like the United States, where this percentage rose from 3.5 percent to 14.7 percent between February and April,” Phlippen said to the newspaper. “Thanks to government measures, this is much more gradual for us. Thanks to the NOW scheme, 1.7 million employees have received or are receiving part of their wages from the government and do not have to be laid off.”

Unemployment in the Netherlands will therefore not skyrocket, Phlippen said. “I suspect that we will not bottom out until 2021 with an unemployment rate of 7 percent to 7.5 percent,” she said to the newspaper.

With the NOW regulation, the government covered up to 90 percent of employees’ salaries for companies that lost income due to the coronavirus crisis. That scheme, and the other coronavirus support measures, are in effect until September. At the end of this month, the government will examine what new government support for companies should look like.

Labor market resilience should be the underlying idea the government focuses on when thinking of conditions to attach to a new round of support, Phlippen said, because that is what the Dutch labor market needs.

“Unemployment rates spiked in the US, but that rate dropped again in May. Because in America people are easily fired, but they also find new work relatively quickly. Employees in the Netherlands are very well protected, but the disadvantage of this is that people are not so mobile,” she said to FD.

That’s resulted in some sectors still facing major staff shortages. “In healthcare, a fifth of the vacancies are unfulfillable and in the renewable energy sector, no interest job seekers show up for more than a third of vacancies.”