Job retention schemes were one of the main policy instruments implemented across EU Member States to weather the negative economic effects of the Covid-19 pandemic. These schemes, including furlough programmes and wage subsidies, were introduced to maintain an attachment between employers and employees during the severe economic downturn. By supporting workers’ incomes and allowing firms to reduce working hours rather than resorting to layoffs, job retention schemes aimed to minimise job losses and hasten labour market recovery.
More than four years later, this CEPS’ In-Depth Analysis report evaluates the employment effects of job retention schemes during the pandemic, relying on data from the EU Labour Force Survey and advanced statistical techniques. The report estimates that job retention schemes significantly supported employment in 2020. They reduced job losses, enhancing employment growth by an average of five percentage points in the short term and preserving an estimated 13.9 million jobs across the EU. In some scenarios, this figure could rise to 20.3 million. However, the research also suggests that the rapid post-pandemic economic recovery and the broad eligibility criteria for job retention schemes might have led to their overuse, where fewer jobs might have been at risk than originally anticipated.
This CEPS In-Depth Analysis paper is based on the Annex to an external study prepared for the Committee on Budgetary Control of the European Parliament under the framework contract IP/D/ALL/FWC/2020-001/C5. The views expressed herein are solely those of the author and the European Parliament assumes no responsibility for any consequences arising from the reuse of this publication.
