Since 2011, the Restructuring support instruments database of the EU PolicyWatch has been collecting information on measures that assist companies and workers to anticipate and manage restructuring. This article looks at measures in the database aimed at supporting employees and employers during the COVID-19 pandemic (2020–2022). It also underlines the role of education and training in continuing to build resilience following the pandemic and explores the ongoing move towards the twin green and digital transitions. The support instruments are examples of restructuring policies introduced across the EU in a bid to improve preparedness and resilience for future shocks.
Introduction
In 2020, the European Commission launched its temporary Support to mitigate Unemployment Risks in an Emergency (SURE) instrument, providing €100 billion to prevent widespread and indiscriminate job losses due to the COVID-19 pandemic. The SURE instrument (applicable in 18 Member States) provides fiscal support for the duration of the pandemic with the aim of keeping people in jobs and supporting businesses to stay afloat.
Over the next few years, many businesses and communities across the EU will undergo restructuring due to the twin green and digital transition. For instance, coal and lignite mining companies will be phased out, while carbon-intensive industries will either expand or contract – depending on the company and the regional and national context. In light of these imperatives, it is critically important for the EU to review measures that provide policy lessons to help future-proof EU markets from shocks, as well as re-evaluating its education and training policy in order to bolster resilience in the face of current and future challenges.
This article explores the types of support instruments introduced or amended to keep people in jobs and support businesses during the pandemic. Such measures provide valuable lessons in how to reduce the impact of any future crises on business and people. The article also looks at the education and training instruments recorded in the Restructuring support instruments database aimed at boosting the capacity of EU workforces to adapt to cases of restructuring and provide appropriate and updated skills for the modern EU labour market. The latter measures will go some way towards addressing the skills mismatches in the European labour market, highlighted by European Commission President Ursula von der Leyen when launching the European Year of Skills 2023 (see also the Pact for Skills and European Social Dialogue work programme).
Protecting jobs during COVID-19
Employee protection and retention
EU support instruments are introduced as policy packages to prevent job losses and aim to both anticipate and manage restructuring (an ex-ante/ex-post approach). The measures are guided by the EU Quality Framework for Restructuring, which reaffirms the importance of investing in human capital to enhance workers’ capacity to adapt to change and minimise the likelihood of job loss, as well as reallocating human resources to activities with high growth potential and quality jobs as per the Europe 2020 strategy.
During the pandemic, the support instruments that proved most effective at anticipating restructuring were short-time work schemes, partial unemployment measures and wage guarantee legislation – reducing the cost burden on employers while assisting employees whose working hours were cut. This was the first time that such measures were widely used across all EU Member States. In addition, many governments subsidised labour costs via transfer payments, which helped employers retain employees and safeguard employee income.
Approximately 40 million European workers received employment protection and income support. In contrast, at the height of the global financial crisis less than 1.8 million EU workers benefitted from such schemes. National governments and the EU are the main stakeholders involved in funding the highest number of support instruments in the Restructuring support instruments database.
The figure below depicts the funding sources of the active support instruments recorded in this database.
Figure: Number of support instruments by stakeholder
Note: Figures represent the actual number of policies funded by each stakeholder. Each instrument can have multiple funding sources.
Source: EU PolicyWatch (Restructuring support instruments database)
During the pandemic, variations of the employment and income protection mechanisms were amended and adopted across EU Member States – an example of EU-wide policy learning. In Sweden, the short-time working allowance was amended after the onset of COVID-19, allowing all private businesses to meet the eligibility criteria in terms of severe economic difficulty. In Slovakia, the short-time work scheme was passed into domestic law in 2021 as a response to the economic shock from COVID-19.
In addition to anticipating restructuring, EU support instruments were introduced to manage restructuring and ensure a socially responsible restructuring process in cases where the insolvency notice has been filed with local authorities. These prioritise safeguarding the living standards of employees for a certain period after job loss.
For example, during the pandemic, anticipatory measures provided the fiscal stimulus to avoid a ‘cliff-edge’ drop in employment and hike in insolvency. In Germany, the number of people in short-time work sky-rocketed from 2019 to 2020 – increasing by 5,958,100 workers. During the same period, applications for the managing insolvency compensation instrument continued to fall.
Of the 79 instruments categorised as ‘Employment protection and retention’ measures in the database (for example, short-time work schemes, wage subsidy, adaptation of working time, flexibilisation of labour mobility), 36 have been newly created or altered due to COVID-19. In particular, the sub-category ‘Income support for people in employment’ which predominantly includes short-time work schemes and partial unemployment schemes, accounts for 27 of these altered measures.
Short-time work has evolved beyond labour market policy to integrate elements of social protection, further lowering cost pressures while maintaining workers’ access to social security systems. In Spain, during the period of working time reduction or collective dismissal, companies received tax exemptions from social security contributions while employees were able to retain full coverage. A similar example prevailed in Portugal, while in Bulgaria the support was split into stages, targeting different sectors during each stage.
Supporting economic competitiveness and keeping business afloat
For European and national policymakers, protecting jobs and income represents one half of the coin for the economic well-being of Europeans. The other half is ensuring the continued competitiveness and survival of businesses.
The COVID-19 pandemic and war in Ukraine have presented unique challenges across the globe in terms of supply chain shortages, production bottlenecks, the energy price crisis and deteriorating economic forecasts. At sectoral level, as a recent Eurofound report confirms, the positive performance of labour markets in the EU have been uneven. On the one hand, the sectors of accommodation and food service activities, wholesale and retail trade, and transport registered a cumulative loss of 1.4 million workers between 2019 and 2021; on the other, the information and communications (IC) sector added 1 million jobs during the same period. The sectors cited first in the previous sentence accounted for the majority of job losses in the low wage quintile (lowest 20% of wage earners) – a sharp contrast to the global financial crisis, which predominantly impacted middle income earners.
Given such structural challenges and the volatile macroeconomic environment, it is not surprising that ‘Reorientation of business activities’ (30%) is the most common category in the Restructuring support instruments database. This category includes measures aimed at reducing supply chain pressures, providing companies with platforms to access new opportunities and facilitating pathways to product innovation and change in organisational strategy. Specifically, ‘Change of production/innovation’ (49%) is the most commonly used sub-category, followed by ‘Matching/networking’ (28%) and ‘Transfer or redeployment of workers’ (20%).
National measures under the ‘Change of production or innovation’ category include the following:
‘Matching/Networking’ measures compliment the above schemes, for example, providing a new platform to match companies with merger or acquisition opportunities (Austria, France, Luxembourg), with customers (Austria, Slovenia) or investors and expertise (Germany, Ireland, Spain) in order to promote innovation, SMEs and internationalisation.
‘Transfer or redeployment of workers’ targets job security and the cost of labour deregulating employment protection to enhance employee mobility. The policy goal is to alleviate the likelihood of insolvency and periods of unemployment by, for example, increasing opportunities for the re-deployment of workers pre-emptively or reducing the risk of restructuring via voluntary mobility schemes. One illustration of this could be to permit a worker in an organisation which no longer requires their services to be seconded to another which does, requiring the conditions of employment with the primary employer to be temporarily paused. These policies reduce job losses and avoid dismissal costs by giving the employer and employee flexibility in the anticipation of restructuring.
Under this sub-category, public employment services (PES) provide an important role in managing restructuring by offering education, training and job placement services. These services redeploy or retrain workers once insolvency is announced and before redundancy begins, minimising unemployment periods.
Building resilience through education and training
Instruments aimed at keeping people employed and businesses afloat focus on economic viability and avenues for growth. However, they are not appropriate levers for tackling structural challenges such as skill shortages and skills mismatches. Investment in training and education policy can provide opportunities to build resilience among workers and boost competitiveness within and between EU labour markets. Targeted investment from government institutions had been shown to reduce cross-country disparity in income loss, avoid prolonged unemployment and decrease the risk of a large drop in income from job-to-job transitions.
The database has recorded many initiatives in this domain which reflect existing policy efforts across the EU. These measures aim to better anticipate and manage the impact of restructuring for employees and companies, while ensuring EU workers are equipped with relevant skills.
The existing infrastructure in countries plays a strategic role in helping policymakers and researchers establish a reliable and comprehensive qualifications barometer. In Luxembourg, the biannual Skills of tomorrow survey collates information on demand for new positions and skills in sectors and regions. Young jobseekers, public authorities and training providers are all targets for this information. Training providers use this information to prepare education and training support for those lacking digital literacy or at risk of future restructuring. In Ireland, the National skills database performs a similar function, reporting on employment trends and outlook, as well as socio-demographic characteristics. So too does the Qualifications Barometer in Austria; however, it is purposely designed to report on short-term developments, capturing potential temporary distortions which contribute to some trends being given too much significance.
To ensure opportunities are accessible, governments also provide standardised accreditation systems. The National catalogue for qualifications in Portugal is an example of this. In Bulgaria, MyCompetence performs this role, as well as offering an e-learning academy which accredits students and is focused on accessibility (all courses are online and automated). In Estonia and Netherlands, prior learning support instruments play a similar role, with, however, the focus on recognising or bridging the completion of prior learning experiences. The policy goal is to help those working at a level higher than their qualifications, or those in job-to job transitions, to easily update their education and training portfolio.
In Poland, the Training Fund in Enterprises, open to all companies and sectors, aims to enhance job mobility by increasing employability. While information campaigns encourage training in the areas of skills shortages, the instrument does not exclude any type of training, as long as it is relevant to an individual’s employment. In an attempt to actively provide subsidised training to the workforce as well as guide the types of education and training offered, some support instruments actively subsidise up- and re-skilling in areas of shortages and mismatches. In Estonia, the Measures to prevent unemployment instrument has a wide scope, eligible to all workers in the country. However, the fund subsidises tertiary education and vocational training in areas where the skills are most needed, based on the skills forecast. This training can also be offered as retraining if an applicant’s area of training is inadequate and fits the skills creation agenda of the government. In Croatia, Funding justifiable costs of vocational training is designed to help companies acquire training for their employees to reduce the impact of changes in production processes, the transition to new technologies or the lack of skilled labour. The emphasis is on digital literacy to enhance employability as well as the competitiveness of companies.
Digital literacy is the most common support instrument in the ‘Education and training’ thematic area of the database. The European Commission has highlighted digital skills as a fundamental priority in ensuring the EU has a workforce with the necessary technological skills and tools to be competitive on the global stage. Instruments in this policy area first and foremost provide opportunities for workers to upskill and retrain specific to digital skillsets. The Digital Skills Bridge is a pilot project in Luxembourg testing the relevance of supporting the transformation of work, jobs and skills resulting from the technological revolution, targeting the entire workforce and assisting companies to adapt both their work processes and employees to the latest technologies in order to meet the challenges of digital transformation. As a member of the EU Digital Skills and Jobs Coalition, Austria has implemented the fit4internet initiative, aiming to offer suitable training and qualifications to all citizens and hence increase the knowledge and use of digital technologies. In Ireland, Skillnet supports nationwide training across all economic sectors for employers, employees and unemployed individuals from sector-specific skills networks, including from four key initiatives: Mentors Works, Climate Ready, Skills Connect, and the Innovation Exchange.
All these measures support the anticipation and mitigation of restructuring. However, as stated earlier, anticipation goes hand in hand with management. This can involve retraining workers, supporting them to find new employment as well as helping employers to find suitably skilled workers. Training and matching platforms are management instruments, activated once insolvency has been announced. To achieve this, matching platforms connect jobseekers with job and training opportunities, such as in Germany. In the Netherlands, Regionale Mobiliteitsteams takes a regional approach, providing services for training specific to the region. The Joint Purchase Training instrument in Finland works together with employers to assist companies in the recruitment process by organising tailored training programmes. Employers can co-create a training plan together with public employment services, tailoring the supply funnel specific to the personnel profile they need to recruit.
Conclusion
Measures to keep people in employment and businesses afloat during the crisis have understandably been a high political priority over the past two years. However, as the European Commission has underlined, solving the structural challenges for the EU workforce is at the top of the political agenda for 2023.
The database provides ample examples of pre-existing support instruments which can be re-evaluated and provide inspiration for further policy developments. The unprecedented scale of support instruments to help mitigate the negative impact of restructuring is an indication of the willingness of governments to directly intervene in future shocks. Beyond the policy lessons to be drawn from the pandemic years, education and training policies will continue to play a role in proactively equipping EU workers with the appropriate skills to face the challenges posed by the twin transition. In the short term, as Just Transition funding is deployed throughout the European Union and the implementation of skills and training funding is well underway, more instruments focused on reskilling for the green transition are expected to be unveiled.
Image © PaulShlykov/AdobeStock
Footnotes