Southern Europe may see covid recovery delay, warns Moody’s

Italy, Spain and Portugal have been battered by coronavirus and their respective economic recoveries could be hamstrung due to rising unemployment.

Labour markets across Europe have been adversely affected; with women, young people and less-educated workers bearing the brunt of redundancy and furlough schemes, according to a report from ratings agency Moody’s.

For the worst-affected countries in southern Europe, specifically those mentioned above, a weaker and more prolonged economic recovery may imply a long-term loss of output, the report stated.

If not addressed by relevant education and labour market policies, a protracted recovery may result in a larger share of low-income households less able to accumulate physical and human capital, especially through educational attainment, which may weaken economy-wide labour productivity over a longer period, it added.

North and South divide

The issue of female participation in the workforce was particularly highlighted as the caring burden traditionally falls on women – whether for children, parents or other relatives.

The Moody’s report found that Italy, Spain and Cyprus had the largest drops in female employment and participation last year.

In contrast, women in Denmark and Sweden are less likely to leave the workforce because of care responsibilities.

Once governments start to withdraw support schemes, Moody’s expects unemployment rates to rise for both men and women. However, participation rates for women may deteriorate further due to their relative dominance in sectors affected by a slow recovery, such as hospitality, but also in sectors hit by longer term trends amplified by the pandemic, such as retail.

Kirsten Hastings

Kirsten is international editor of Expert Investor and International Adviser. She joined Last Word Media in October 2015. Kirsten has a Masters in Financial Journalism from the...

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