Corona Shock on the Labour Market

While the number of training participants fell by about 10 percent due to the suspension of the training activities of the Public Employment Service Austria (AMS), the number of people registered as unemployed increased by two thirds (65.7 percent). Compared to the financial and economic crisis of 2008-09, the current crisis is less focused on the production of goods and covers many economic sectors, especially the service sector. Accommodation and catering, construction, transport, temporary agency work, entertainment, parts of trade and personal services are particularly hard hit, but unemployment is rising in all parts of the economy.

While the number of unemployed persons has been declining continuously over the last three years, falling by 11,000 (2.7 percent) to around 400,000 in February, a massive increase followed in the second half of March after the initial restrictions and business closures on 15 March 2020. On average, around 12,000 people were added to the unemployed each day. As the Austrian Public Employment Service (AMS) announced today, 562,522 people were registered as unemployed or in AMS training at the end of the month, which is 193,543 (52.5 percent) more than a year ago. The corona crisis thus has a more direct and stronger impact on the labour market than the financial and economic crisis in 2008-09, when unemployment increased more slowly and in no month by more than 73,000 persons or 33.2 percent. At around 563,000, unemployment is now at its highest level in the Second Republic. Approximately 504,000 people are unemployed, another 58,000 people are enrolled in AMS training.

The current crisis and its effects on the labour market are unprecedented in Austria: the massive increase in unemployment is largely the result of the loss of economic activity in numerous sectors of the economy, resulting from restrictions on public life at home, the interruption of supply chains and lower international demand. In addition, border closures sometimes mean that workers are not available to commute to Austria from abroad. These factors have led to numerous terminations of employment relationships and at the same time prevent new hires.

The reaction of the labour market to the current crisis does not follow the typical pattern from the past. While the crisis in 2009 was based on a decline in international demand and primarily burdened Austria’s export-dependent industry, the current economic shock is not only coming from abroad, but above all from within Austria: the restrictions on public life that have been implemented here and the associated closures and production losses. As a result, the current economic downturn is less focused on the production of goods and affects many sectors of the economy, especially the service sector.