European Capital City Labour Markets Weak as Coronavirus Flares
Job postings in the five largest Western European capitals are lagging.
- Job postings in Berlin, London, Madrid, Paris and Rome trail the rest of their countries as coronavirus-related restrictions tighten across Europe.
- The lag reflects the fact that customer-facing service sectors like food, hospitality, and beauty & wellness are harder hit in the capitals than elsewhere.
- These trends may stem from the greater prevalence of work-from-home jobs and reduced travel outside the home in these cities, evidence that the pandemic is having a disproportionate impact on the labour markets in them.
Western Europe’s five major capital cities — Berlin, London, Madrid, Paris and Rome — are facing renewed restrictions as the second wave of COVID-19 flares. Of course, national lockdowns have been imposed across Europe and capitals are by no means the only places now under strict public health controls. Nonetheless, jobs in these showcase cities have been hit more than their respective national labour markets.
Job postings on Indeed demonstrate this clearly. The five major Western European capitals trail other parts of their countries when posting trends for the first nine months of 2020 are compared with the same period in 2019. The lag is especially pronounced in face-to-face service jobs, reflecting that city-centre footfall has generally waned more in the capitals than elsewhere.
Taken together, these trends suggest a long, hard period of adjustment for service workers in these capitals as coronavirus-related restrictions tighten.
Labour markets in capital cities are weak
Relative to last year’s trend, job postings on Indeed are down 8 percentage points more in Berlin, 9 points more in London, 7 points more in Madrid, 16 points more in Paris and 11 points more in Rome than in the rest of their respective countries.
Across these five cities, overall job postings are recovering more slowly than elsewhere in their respective countries. But the gap between these cities and other places is especially pronounced in service jobs, such as food preparation & service, beauty & wellness and hospitality & tourism. Jobs in these sectors often feature high levels of face-to-face contact with customers and are highly sensitive to coronavirus-related restrictions.
Work-from-home jobs are more common in the capitals than outside them
The explosive growth of working from home in the capital cities appears to be playing a role in the hit to customer-facing jobs. In all five, the share of job postings that mention working from home is substantially higher than in the rest of the country. The main reason is the high share of postings in sectors like finance, tech and research in which work can often be done from home.
This shift is bad news for jobs at city-centre retailers, restaurants and entertainment establishments. The drop in city centre footfall associated with remote work translates into sharp falls in business. In addition, a coronavirus-related collapse of tourism and business travel is undoubtedly also depressing hiring in those sectors.
Capital cities face a difficult labour market adjustment
This is a big-city recession all over the world. For large European capitals, this means a longer and potentially more difficult period of labour market adjustment than for smaller cities, towns and non-urban areas. The longer local customer-facing jobs take to recover, the greater the risk they disappear or move somewhere else — and the harder it will be for people formerly employed in these jobs in Berlin, London, Madrid, Paris and Rome to get back to work when restrictions are lifted.
We used administrative divisions to approximate the metropolitan areas of capital cities: Berlin = Land Berlin; London = Greater London; Madrid = Comunidad de Madrid; Paris = Île-de-France; Rome = Città metropolitana di Roma capitale. Work-from-home postings are those that contain keywords related to working from home or remote work in the job title or job description. These jobs allow for remote working at least part of the time, either permanently or temporarily, due to the pandemic.
To measure job posting trends, we calculated the seven-day moving average of the number of job postings on Indeed. We indexed each day’s seven-day moving average to the start of that year (1 February 2020 = 100 for 2020 data, and so on). For each city and country, we report how the trend in total job postings this year differs from last year in order to focus on recent changes in labour market conditions due to COVID-19. For example, if job postings increased 10% from 1 February 2019 to 30 October 2019, but fell 20% from 1 February 2020 to 30 October 2020, then the index would have risen from 100 to 110 in 2019 and fallen from 100 to 80 in 2020. The year-to-date trend in job postings would therefore be down 27.3% on 30 October 2020 (80 is 27.3% below 110) relative to the same date in 2019.
This post is based on publicly available information on the Indeed website in France, Germany, Italy, Spain and the UK. It is limited to those countries, is not a projection of future events and includes both paid and unpaid job solicitations.
Pawel Adrjan is Head of EMEA Research at the Indeed Hiring Lab and a Research Fellow at Regent’s Park College, University of Oxford. Before joining Indeed, Pawel spent over a decade in investment banking, holding senior roles in risk management, credit ratings advisory, and treasury at Goldman Sachs and Barclays in London and New York. His research focuses on a wide range of labour market topics, such as wages, pensions and the impact of technology on jobs. Pawel speaks Polish, Spanish and French. He has completed a B.A. in international studies and a B.S. in economics from the University of Pennsylvania and an M.Phil. and a Ph.D. in economics from the University of Oxford.