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4th Feb 2023

Energy crisis costs thousands of EU jobs, but industrial output stable

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Thousands of Europeans have already lost their jobs as a result of the energy crisis, a new report shows.

In the report published by Eurofound, the EU agency that monitors working conditions, high energy prices have led to job losses across sectors, with energy-intensive sectors especially hard hit.

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And the impact of the energy crisis is only just beginning. "With no sign of ending the war in Ukraine, further restructuring during the winter appears inevitable," the report notes.

Metal and aluminium companies were among the first sectors to record large-scale layoffs. Alum Tulcea, a factory in Romania, fired over half its workforce of 700 in June. Slovalco, the only aluminium producer in Slovakia, will send 300 of its 450 employees home.

The Dutch aluminium producer Aldel plans to let go of nearly all of its 200 employees by the end of 2022.

Plastic, rubber and other non-metallic producers have reported layoffs, and chemical producers in Germany, Slovakia, and Romania have also downsized.

Hotels and hospitality have also had to close. In Estonia, Noorus SPA Hotel, located in the resort town of Narva-Jõesuu, announced its closure in July and dismissed all its 183 employees due to high heating costs.

Caroli Hotels in Italy also closed two hotels in Puglia, citing high energy costs, with 275 people to lose their jobs.

But even if some factories and businesses have had to close, Eurostat data shows overall industrial production in Europe has remained stable throughout the energy crisis.

Although these overall figures hide the fact that thousands of people have lost their jobs, it indicates that EU industries have proved to be resilient to high gas prices.

These relatively positive numbers are partly due to the emergency efforts by EU governments to protect businesses against high prices. But industries have also been able to adapt themselves.

According to a recent survey by the Munich-based research institute Ifo, 75 percent of German industries using gas in the production process have been able to reduce gas use without cutting production.

Germany's industrial production was up 0.8 percent in October compared to last year.

In fact, most EU countries increased their industrial output. Only the Baltic states and Luxembourg reported a decline in industrial production, with Estonia especially hard hit.

But energy costs are projected to remain high for the foreseeable future.

As the head of the International Energy Agency noted recently in the Financial Times, to adapt to high energy prices longer term, the EU should end its reliance on energy-intensive industries and build an industry based on renewables or "face de-industrialisation."

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