- First Covid-19 half-year brings EBRD states more job losses, business closures than 2008-09
- Burden in 2020 disproportionately borne by those with lower education, income levels
- EBRD-ifo Institute survey results published with EBRD Regional Economic Prospects report
The regions where the European Bank for Reconstruction and Development (EBRD) operates have already seen more job losses and business closures in the first half-year of the coronavirus pandemic than in the aftermath of the global financial crisis of 2008-09, says a study conducted by the EBRD and the Munich-based independent research group, the ifo Institute.
The burden of the 2020 crisis, it adds, is also disproportionately borne by those with lower levels of education and income.
The results, based on a survey of almost 40,000 people carried out in August 2020, are published today within the EBRD’s Regional Economic Prospects report. It compares the effects of the pandemic on eight economies from the EBRD regions – Belarus, Egypt, Greece, Hungary, Poland, Serbia, Turkey and Ukraine – with its impact on six advanced European economies (France, Germany, Italy, the Netherlands, Spain and Sweden).
The economic effects of the Covid-19 crisis have been significantly more acute in EBRD countries than in advanced Europe, the study shows.
It reveals that 73 per cent of respondents in the EBRD regions say they were personally affected by the Covid-19 crisis, compared with only 41 per cent in advanced Europe, where stimulus packages were typically larger.
Fifteen per cent of respondents in the EBRD regions report having lost their job – more than double the level in advanced economies. Family business closures were also much more common in the EBRD regions (affecting 15 per cent of households compared with 2 per cent in advanced Europe), according to the survey.
The burden of the Covid-19 crisis has been borne disproportionately by those with lower levels of education and lower levels of income, measured before the pandemic. The young and those working for smaller firms were also more likely to lose their jobs as a result of the pandemic. In the EBRD regions, those working in the public sector or state-owned enterprises before the crisis were less likely to lose their jobs than those working in the private sector.
These averages conceal significant differences within the EBRD regions: job losses ranged between 9 per cent in Belarus and 23 per cent in Egypt. Family business closures were less common in Hungary, Poland and Greece (affecting around 6 per cent of households), but more widespread in Egypt (affecting a third of households), as well as in Turkey.
The survey also compares this year’s crisis with the economic impact of the global financial crisis of 2008-09. The EBRD-ifo Institute findings are compared with the findings of the special crisis module of the 2010 Life in Transition survey, a similar representative household survey conducted by the EBRD and the World Bank. It is important to note that the August 2020 survey only picks up the early impact of the current crisis, while the Life in Transition survey, conducted in late 2010, captured the overall impact of the global financial crisis over the subsequent two years.
Although job losses, and in particular business closures, appear to be more widespread than in the aftermath of the 2008-09 crisis, policies such as government backed furlough schemes seem to have helped somewhat. Wage reductions and suspensions are also found to be less common now.
People in the region have so far relied more on supplementary work than in the aftermath of 2008. About a fifth of respondents in the EBRD regions say they increased their hours in their existing job. A similar share is reporting starting a second job.
Reflecting a combination of government support and increased supplementary work, household consumption has so far fallen less in the first six months of this crisis than a decade ago. Around a fifth of households have reduced their consumption of staples, and over 40 per cent have reduced their consumption of luxury goods in the EBRD regions – more than double the shares in advanced economies, but below the levels seen a decade ago.