US Department Store Headquarters Cuts 3,900 Employees... 'Employee Sharing' Implemented in China

Prolonged COVID-19 Crisis
Severe Impact on Global Job Market
Employee Layoffs to Cut Labor Costs
Rising Unemployment, Small Businesses Close or Suspend Operations
Germany Injects Subsidies for Reduced Working Hours

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The novel coronavirus disease (COVID-19) pandemic is shaking the global employment market. Macy's, a famous American department store, has forced 3,900 headquarters employees to take unpaid leave due to a sharp decline in sales, and the number of unemployed in Germany in June increased by 637,000 compared to the same month last year. In Sweden, the occupations with the highest number of COVID-19 cases were bus drivers and taxi drivers. In China, where COVID-19 swept through first, a new business model called 'employee sharing' has emerged.

◆Famous U.S. Department Store Cuts 3,900 Headquarters Employees= According to the Korea Labor Institute, at the end of June, Jeff Gennette, CEO of Macy's, one of the famous American department store brands, implemented restructuring by temporarily forcing 3,900 headquarters employees to take unpaid leave due to a sharp decline in sales. This accounts for about 3% of Macy's headquarters staff, and the company announced that this measure could save $365 million (approximately 438.2 billion KRW) in labor costs by the end of this year. However, Jeff Gennette stated, "We plan to rehire the temporarily reduced personnel depending on the economic situation." Macy's case shows that COVID-19 is also affecting the employment market for white-collar jobs such as office workers.

◆Germany: 40,000 More Unemployed in June Compared to Previous Month= The German labor market continues to be under pressure due to the COVID-19 crisis. The number of unemployed in June reached 2,853,000, an increase of 637,000 compared to the same month last year. Compared to the previous month, it increased by 40,000. The unemployment rate rose by 0.1 percentage points from the previous month to 6.2%. Furthermore, as the COVID-19 crisis prolongs, negative impacts such as income reduction are expanding. According to a survey conducted by the Economic and Social Research Institute (WSI) of the Hans-B?ckler Foundation, 20% of respondents in April said COVID-19 negatively affected their income, while in June, 26% reported income losses. Among households with a monthly income below 1,500 euros (2.1 million KRW), 40% reported a decrease in income, and even among respondents with monthly incomes above 3,200 euros (4.48 million KRW), 22% reported income reductions. Germany is injecting large amounts of short-time work allowance to stabilize the labor market. In March, 2.49 million euros and in April, 6.83 million euros of short-time work allowances were paid through the Federal Employment Agency.

◆Brazil: 500,000 Small Businesses Closed or Suspended Operations= Due to the impact of COVID-19, more than 500,000 small businesses in Brazil have closed. According to a report released in July by the Brazilian Institute of Geography and Statistics (IBGE), 520,000 (39.4%) out of 1.3 million companies temporarily or permanently closed due to management difficulties and sales decline caused by COVID-19. Especially, small businesses with fewer than 50 employees were hit the hardest, accounting for 99.2% of the closed or suspended businesses. By industry, the service sector was the highest at 49.5%, followed by commerce (36.7%), construction (7.4%), and manufacturing (6.4%). Regarding employment changes, 61.2% of companies maintained their number of employees, 34.6% reduced their workforce, and only 3.8% hired new employees.

[Image source=Yonhap News]

◆France: Employment Worsened in Q2... Gradual Improvement Trend= France's employment situation sharply deteriorated in the second quarter due to the COVID-19 crisis. According to the second-quarter employment statistics released by the French Social Security Central Agency (Acoss), total employment fell by 6.5% in the first quarter and by 40.1% in the second quarter. Employment in April decreased by 72.2%, followed by a 49.5% decrease in May and a 9% decrease in June, showing a gradual improvement trend. The impact of the lockdown policies implemented from mid-March to mid-May affected the entire employment market. Looking at new employment in the second quarter, the tertiary industry decreased by 42.1%, manufacturing by 37.2%, and construction by 27.1%. Acoss emphasized that employment sharply decreased in all regions.

◆Bus and Taxi Drivers Vulnerable to COVID-19= In Sweden, the occupations with the highest number of COVID-19 cases were bus and taxi drivers. According to a report released in June by the Swedish Public Health Agency, among 23,319 bus and tram drivers, 140 tested positive, the highest number among all occupations. Among 12,475 taxi drivers, 83 tested positive, the highest rate proportionally. Restaurant cooks had 23 confirmed cases out of 6,578. Additionally, workers in other service sectors such as vending machine item exchange, gas and water meter reading, and firefighters showed many confirmed cases. These occupations had about twice the infection rate compared to the overall population of Sweden. Other occupations with high infection rates included cleaners, caregivers, and waiters.

◆China's 'Employee Sharing'... Deploying Workforce to Sites with Labor Shortages= China, which experienced the COVID-19 crisis earliest, has introduced a new employment form called 'employee sharing.' Beyond sharing objects or spaces, a business model sharing people has emerged. Employees who started unpaid leave due to deteriorating business conditions in hotels, department stores, and other sectors are deployed to industries such as online sales and distribution, which have expanded due to COVID-19 and face labor shortages. This began in February when Hema Xiansheng, a large supermarket established by Alibaba, announced employee sharing with several nationwide restaurant chains such as Xibei and Winhaiyao. Restaurant employees temporarily on unpaid leave started working at Hema Xiansheng to fill labor shortages, and within a few days, about 1,800 employees from 32 companies were 'shared' to Hema Xiansheng. Now, not only large supermarkets like Hema Xiansheng and Walmart but also large distribution companies participate, and Alibaba operates an online platform called 'Blue Ocean' to facilitate this labor utilization system.

This content was produced with the assistance of AI translation services.