Which jobs are most at risk because of COVID-19?

Effective policies to minimize job losses in the wake of the COVID-19 pandemic require knowing which jobs are at most risk. While almost all European economies are under a lockdown, not everyone will suffer to the same extent. Those who can work from home, whose jobs do not require face-to-face interaction with others, or are in essential industries can more easily continue to earn a living. In contrast, those whose jobs are nonessential or cannot be performed from home are facing the largest income losses.

Based on these criteria, we identify the jobs most at risk in the European Union. We combine indicators on the occupations that can be done from home (as proposed by Dingel and Neiman, 2020) or those that require extensive face-to-face interactions with clients or co-workers (as suggested by Avdiu and Nayyar, 2020), with a new indicator of what industries are considered essential by governments and hence not susceptible to mandated lockdowns. Jobs at most risk are those exposed to both threats—they are in nonessential industries and cannot be performed from home or require face-to-face interaction.

Measures of which sectors are essential are only weakly correlated with measures of home-based work and face-to-face interaction. Thus, merely relying on whether the work can be performed from home and/or requires face-to-face interaction will provide a partial picture of which jobs are at risk.  Combining indicators of what industries are legally essential, with the share of jobs that can be performed from home reflects labor market risk more clearly. (As explained in detail in Garrote Sanchez, Gomez Parra, Ozden and Rijkers, 2020)

More than half of all jobs in the EU (58 percent) are in sectors considered essential. Figure 1 shows the distribution across subnational geographic areas. The share of employment in these essential industries varies significantly and tends to increase with income. Luxembourg, Scandinavian countries, France, the Netherlands, and Belgium have a higher share of employment in essential sectors. Southern countries like Spain and Italy are more reliant on nonessential industries, such as tourism.

Figure 1. Percent of jobs considered essential, European Union, Norway, and Switzerland, 2018

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).

In the EU, 35 percent of all jobs can be done at home. This  is very similar to Dingel and Neiman’s (2020) finding that 37 percent of U.S. jobs can be performed at home. Jobs in the information and communications technology, finance, and education sectors are highly amenable to working from home. Jobs in agriculture and hospitality (hotels, restaurants) are less so. Wealthier and mostly Northern European countries, like the Netherlands, Denmark, Norway, Switzerland and Sweden, are characterized by a greater prevalence of work that can be done from home. In contrast, the poorer Southern European countries and the new member states in Eastern Europe have relatively fewer jobs that can be done from home.

A similar and related measure is the extent of face-to-face interaction a job requires. While this is related to home-based work, correlation is not perfect. Many jobs, such as in manufacturing, cannot be performed at home but do not involve significant face-to-face interaction. In the EU, 24 percent of jobs do not require face-to-face interactions. The prevalence of jobs requiring little face-to-face interaction is not necessarily correlated with income. In fact, it is highest in central European countries such as Czech Republic, Hungary or Slovakia, due to a higher share of manufacturing jobs.

Jobs in nonessential industries that are not amenable to telecommuting account for 30 percent of all employment in the EU. The ratio is higher in Southern and Eastern Europe and it is between a third to half of all jobs in large parts of Portugal, Spain, Italy, Greece, Romania, Czech Republic, Hungary, and Slovakia (Figure 2). In contrast, the share of vulnerable jobs is significantly lower in Scandinavia, France, Germany, and the United Kingdom.

Figure 2. Percent of jobs considered nonessential and not amenable to telework

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).

Combining instead our nonessential criterion with the extensive face-to-face requirements yields a qualitatively similar picture (Figure 3). The main exception is that Central and Eastern European countries are now less exposed since a larger share of their jobs are in the manufacturing sector. These jobs are not easily amenable to home-based telework arrangements, but they do not require face-to-face interactions either. In other words, factories can weather social distancing better when compared to many nonessential services. This can be a saving grace for Eastern European countries in this crisis.

Figure 3. Percent of jobs considered nonessential and with extensive face-to-face interactions

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).

The maps above point to a disturbing pattern; European regions that are already economically disadvantaged are also likely to be plagued by the largest labor market crisis in recent history. The share of jobs directly threatened by the COVID-19 crisis is strongly negatively correlated with regional GDP per capita. A 10 percent increase in regional GDP per capita is associated with a 0.5 percentage point reduction in jobs at risk, according to our naive estimates. (Details are in Garrote Sanchez, Gomez Parra, Ozden and Rijkers, 2020)

This negative association between share of vulnerable jobs and income levels also holds within countries. Figure 4 shows that workers with the lowest pay suffer the highest vulnerability. The share of workers who cannot work from home, are working in nonessential sectors, in jobs requiring extensive face-to-face interaction all sharply decline with income. Workers in the bottom earnings decile are more than twice as likely to be at risk than those in the top income bracket, since 42 percent of all workers in the bottom decile are employed in jobs in nonessential industries that cannot be performed at home, whereas  such jobs only account for 16 percent of employment among workers in the top income decile.

Figure 4. Vulnerability of jobs by income decile

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).

A second dimension of vulnerability is the age distribution of workers. Unlike the health risks of COVID-19, which steeply increase with age, the economic risks are concentrated among the young and decline with age (Figure 5). Similar patterns hold for less-educated workers (Figure 6)

In summary, COVID-19-induced labor market pain is disproportionately borne by young, poorly educated, and poorly paid workers, and by regions that are already less well-off and characterized by a greater prevalence of temporary contracts. Through its employment effects, the lockdown is bound to increase inequality.

Figure 5. Vulnerability of jobs by age groups

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).

Figure 6. Vulnerability of jobs by education level

Source: Authors’ calculations based on data from Eurostat, European Union Labor Force Survey (2018).