In 2020, the Covid-19 pandemic had a much smaller impact on the French labour market than on GDP. On an average annual basis, GDP growth plunged 8.2% while private payroll employment declined by only 1.7%. The unemployment rate even fell slightly compared to 2019 (-0.4 points on an average annual basis). Employment was buffered by emergency support measures, notably the massive use of job retention schemes, which is the main reason why the overall negative impact was so mild
Even 30 years after reunification, income differences persist due to a productivity gap in the new Länder. Productivity is about 20% lower than in the rest of the country. The largest income differences are in the manufacturing sector, as headquarters and research centres remain concentrated in the West. Many young people have moved from East to West attracted by higher wages and better living standards. Between 1991 and 2016, the new Länder lost about one quarter of their working-age population. East and West have become closer demographically. Net migration is actually around zero, as income prospects in the East have improved. In addition, some regions in the West are now also experiencing a rapid ageing of their population, as has been the case in the East.
Recent economic data have improved on the back of the easing of lockdowns. This may create a feeling of false comfort. The effects of the severity of the crisis will make themselves felt well into the future. A key factor is the rise in unemployment and in unemployment expectations. Both weigh on household spending, due to related income losses and increased precautionary savings. The major national central banks of the Eurosystem expect unemployment to increase in 2021, despite the economic recovery. When visibility remains limited and the pressure on profits high, many companies have no other option than to reduce their labour force
The Covid-19 crisis will leave its mark on the economy. However, the decade ahead offers new prospects for growth and employment. Spain suffers from a lack of employment and investment in technology-related sectors, but has opportunities to close these gaps. The renewable energy sector can be a significant source of employment over the medium to long term.The National Energy and Climate Plan is a significant step forward (if passed and implemented). The European Green Pact and Brexit may also help boost high-tech investment in the country.
