In an era where energy costs are surging globally, the European Union (EU) labour markets have demonstrated exceptional resilience amidst significant restructuring challenges. The Eurofound’s European Restructuring Monitor (ERM) database meticulously documents the ramifications of the energy crisis on employment within the EU, offering insights into how various sectors are adapting.
The Energy Crisis and Its Impact on the EU
The energy crisis was ignited by Russia’s invasion of Ukraine in February 2022, leading to unprecedented energy prices. The EU, significantly reliant on Russian energy supplies, found itself acutely impacted. In reaction, the European Commission enacted sanctions and imposed restrictions on oil and gas imports from Russia. In turn, Russia defaulted on supply commitments to numerous Member States. To counteract this, the Commission initiated the REPowerEU Plan in May 2022. This plan aims to eliminate the EU’s reliance on Russian fossil fuels, diversify energy suppliers, encourage energy-saving measures, and expedite the transition to green energy.
The Impact on Retail Electricity Prices
Retail electricity prices in the EU have surged by almost 50% year-on-year since July 2021, affecting both households and businesses. This increase has led to higher costs, threatening production and employment levels. In response, some companies have opted to temporarily halt production while retaining their workforce, whereas others have been compelled to implement restructuring plans. The repercussions of the energy crisis on EU employment are highlighted in several recent cases documented by Eurofound’s European Restructuring Monitor (ERM) database.
Job Cuts Manufacturing
Job cuts have become widespread in energy-intensive manufacturing sectors. For example, numerous companies within the basic metals manufacturing sector have announced job reductions. The highly energy-intensive aluminium production was among the first sub-sectors to experience large-scale restructurings.
The energy crisis has notably also affected the manufacturing sectors of plastic, rubber, and other non-metallic mineral products. In Belgium, Arlanxeo, a leading rubber producer, announced its intention to make 70 of its 345 employees redundant. Meanwhile, in Czechia, the plastics firm Plastic Parts & Technology was forced into bankruptcy in September, a move primarily attributed to the dramatic rise in energy costs, resulting in the loss of all 110 jobs.
The manufacture of chemicals and chemical products is also suffering. Fortischem, one of the country’s largest chemical companies, announced in September its plan to dismiss 362 employees. Meanwhile, in Romania, the chemical producer Chimcomplex announced its intention to reduce its workforce by 396 by the end of 2022, aiming to optimise operational costs and the efficiency of human and financial resources.
The Services Sector, Specifically the Accommodation Subsector, Has Also Been Hit
The accommodation subsector within the services industry has been severely impacted. In Estonia, the Noorus SPA Hotel announced its closure in July, leading to the dismissal of all its 183 employees, due to unsustainable increases in heating costs. Similarly, Caroli Hotels in Italy disclosed in October the closure of two of its establishments in Puglia, resulting in job losses for 275 individual
The Resilience of the EU Labour Market
Despite these significant disruptions, the broader labour market outlook remains positive, underscoring the resilience of the Union’s productive model, even when confronted with the unexpected shock of a war on its doorstep. The aggregate EU unemployment rate has declined since the war began in February 2022, reaching its lowest level in over three decades at 6% in October 2022. This resilience is mirrored in the European Restructuring Monitor (ERM) restructuring cases throughout 2022. Notably, even amidst the conflict, total job gains in instances of job creation have surpassed job losses in scenarios of job destruction across all broad sectors.
The Response of EU and National Policymakers
EU and national policymakers have acted decisively in response to the energy crisis, introducing packages to alleviate the burden of escalating energy costs for households and businesses. A notable initiative is the agreement reached by the European Council in October 2022 aimed at capping energy prices across the EU. Council President Charles Michel highlighted that the concerted action by EU leaders was intended to lower energy prices for households and businesses throughout the EU, ensure the security of energy supply, and promote the adoption of energy-saving measures.
Navigating the Energy Crisis and Safeguarding the Future of EU Labour Markets
In conclusion, the energy crisis has undeniably presented substantial challenges to the EU labour market, leading to restructuring and job reductions across various sectors. Nonetheless, the demonstrated resilience of the labour market, alongside the proactive steps undertaken by EU and national policymakers, shines as a beacon of hope.
As the EU continues to navigate through this crisis, the emphasis must be on protecting employment, bolstering affected sectors, and advancing the shift towards sustainable energy sources. The resilience and adaptability of the EU labour market are under continual scrutiny; however, through strategic planning and decisive actions, it is well-equipped to surmount these challenges and emerge more robust.
