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“It’s the canary in the coal mine” warns economist

Since the beginning of October some 800 Belgian businesses have made use of the facility of putting staff into temporary unemployment.  In all over 41,000 workers have been laid off for the minute.

Since the beginning of October employers can invoke the energy crisis as a reason to send workers home on temporary unemployment benefit.  784 businesses have done this affecting 41,226 workers according to figures from the state employment agency RVA. In Flanders alone 28,334 workers are affected.

The RVA says the figures remain modest compared with the surge in temporary unemployment at the time of the pandemic.  At its height over 100,000 workers were laid off temporarily at this time.

Still, labour economist Stijn Baert speaks of a disturbing development.  “This is an indication of a possible recession.  Vacancies too are edging lower.  Unemployment is no longer falling”.

A recession occurs when economic growth is negative for at least two quarters.

“Businesses don’t lay people off temporarily for fun” says Stijn.  “They are involved in stiff competition with foreign rivals and face European energy prices that are higher than elsewhere.  It’s making production and employment no longer profitable”.

“It’s the canary in the coalmine” says Stijn.  “Businesses are making workers redundant but use temporary unemployment as the first measure. It’s a transitionary measure in the hope energy prices fall.  We notice that temporary unemployment is often followed by restructuring”.

It's above all in West Flanders that temporary unemployment is used to ease the situation.  “The West Flemish economy consists of many sectors that face foreign competition including the textile industry. If you can’t afford to have higher prices and are an energy intensive company, then it’s logical that temporary unemployment will peak” says Stijn. 

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