Employment is growing strongly in the euro zone

ADDRESSING THEEUIHS Brussels Economic Forum in June, Ursula von der Leyen, the president of the European Commission, gave an upbeat assessment of the ’s recovery. She promised that “in 18 months from now, all 27 member states will be back on track, recovered from the crisis.” But she noted that “it is not by chance. This is the result of the policy decisions we took since the very early days of the pandemic.” A sequence of recent strong output and employment figures indeed seem to vindicate this bold claim. On August 23rd the preliminary estimate of the euro-area purchasing managers index, a monthly survey of companies compiled by Markit, suggested that employment in July and August will turn out to have grown at its fastest monthly rate for 21 years. That followed solid official data on output and employment the previous week.Mrs von der Leyen credited European governments for preventing a big rise in unemployment during the crisis. The euro area experienced a much lower peak in unemployment than America (see chart), mainly because governments were quick to expand their national job-retention schemes. In Germany, for example, the terms of the scheme, under which workers work shorter hours for less pay to avoid layoffs, were loosened. Agency workers were included for the first time, and the government put in more cash, offering to reimburse workers for at least 60% of forgone wages and 100% of social-insurance contributions. In Italy restrictions on the size and type of firms eligible for government support were relaxed, and the processes for claiming support were simplified. An attempt to ban layoffs, however, was unsuccessful.