COVID-19

This report describes the implementation and changing features of job retention schemes in the EU between 2020 and 2022. In response to the COVID-19 health emergency, EU governments swiftly deployed job retention schemes to preserve employment, support businesses and maintain individual incomes. The report shows that, following an initial period during which job retention schemes underwent numerous changes in their eligibility and conditionality criteria, the institutional features of job retention schemes stabilised as the pandemic progressed. Furthermore, the report demonstrates that a high degree of heterogeneity in the features of the schemes was maintained throughout the pandemic and its aftermath. While some of the schemes expired with the end of the pandemic, others were transformed into permanent institutions of the labour market. The report also analyses the employment and distributional effects of job retention schemes, highlighting their significant effects in terms of number of jobs saved and share of personal incomes maintained during the pandemic. An estimated 24.8 million jobs were saved in the EU in 2020 through the use of such schemes. Furthermore, the schemes absorbed more than one-third of the income shock produced by the COVID-19 pandemic in 2020 and more than one-fifth of the income shock in 2021.

The fast and steady recovery in employment following the COVID-19 pandemic in the EU benefited from proactive policy responses to the crisis and from resilient labour markets. Almost 90% of regions across the EU had exceeded their pre-pandemic employment levels by 2022; however, significant regional disparities remain. EU regions fared differently, depending on their economic specialisation and notably on the concentration of jobs in knowledge-intensive services that can be performed remotely. The geography of telework across EU regions was primarily shaped by differences in occupational structure, and fast internet connectivity remains an essential enabling factor. Recent initiatives to support remote work in rural, peripheral or marginalised areas through the creation of coworking spaces show how dynamism and diversity in rural economies can be promoted.

This report provides a comprehensive examination of trends in income inequality within and between the EU Member States from 2006 to 2021. The study also aims to answer the related question of whether the middle class is becoming smaller because of developments in respect of disparities in household disposable income. A robust analysis is conducted using a wide range of interrelated indicators, including income inequality; income levels across Member States and along the income distribution; the size of the middle class; the share of national income received by different income groups; and poverty rates and other indicators of economic hardship experienced by European households. The role of public policies in explaining some of these trends is also examined. The results indicate that although income inequality has been relatively stable on average across the Member States, trends are much more mixed at Member State level, while the size of the middle class has shrunk in most of them.