Economic Policy Review ISSN 1313 - 0544

The Spring Lockdown Did Not Lead to an Influx to The Public Employment Services

02.06.2021
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The introduction of restrictive measures and the closure of the restaurants in March 2020 led to the strongest short-term shock on the labor market in Bulgaria. Within a few weeks, the number of the registered unemployed increased by nearly 200,000 and reached almost 300,000. The beginning of 2021 brought new restrictive measures, but judging by the data from the Public Employment Services (PES), they didn´t have the same negative effect on the unemployment.

The first two lockdowns, from spring and late autumn 2020, have a visible effect on the total number of the registered unemployed (see chart), as it is particularly clear for the time period between mid-March and late May. At the beginning of 2021, however, the new measures didn´t lead to a new rise of the unemployment, on the contrary - the first four months of the year follow the usual dynamics of the annual unemployment cycle, but from a higher starting point after the rapid growth in 2020. It is of interest to mention, that after the end of the Christmas holidays and vacations there is a slightly more significant increase in the number of unemployed compared to previous years.

The different dynamics in the course of the three series of restrictive measures are due to several factors. The first is the degree of "closure" - after all, in March 2020 the restrictions were much more severe than those introduced in the autumn and spring of 2021, there were no checkpoints, closures of cities, and almost all business is working normally. This is specifically true for the manufacturing industry - while last spring the work of a significant part of this branch of industry was hampered by a lack of supply and logistical problems, this time such problems are absent. It is also important to maintain international trade, which is virtually unaffected by the new wave of measures.

Among the key factors is the uncertainty. Comparing the spring of 2020 and 2021, last year the number of unknowns was much higher - the duration of restrictions, the introduction of increasingly stringent measures, the lack of clarity about the size and wording of state support for closed businesses. The uncertainty about the future certainly plays a role in the business decisions of lying off and hiring employees and respectively affects the dynamics of the unemployment. We have to mention the government measures themselves - while at the beginning of the restrictions the government itself was not very sure what support to provide and to whom exactly, both the autumn and the second spring lockdown are in the conditions of established employment retention schemes.

The indicator itself has also an impact. To the extent that the Employment Agency measures unemployment, but not the employment itself, the data it provides reflect only the registrations in the employment offices. Last spring, the majority of newly laid off workers were entitled to unemployment benefits. However, as the sectors most severely affected are the same - hotels and restaurants, transport - many of those employed have exhausted their opportunities to receive such benefits and, consequently, the loss of their jobs does not affect registrations at employment offices.

The full picture of the state of the labor market in the context of the spring restrictions will be seen after the publication of employment data. In the previous review of data on the dynamics of employment throughout 2020, we found that job losses exceed (but not by much) the estimates of the total impact on the labor market, made on the basis of data on the unemployed.