COVID-19 crisis had 6.8 billion euro impact on NEO benefits over the past two years

The COVID-19 crisis had a financial impact of 6.8 billion euros on the benefits paid by the NEO (National Employment Office) in 2020 and 2021, mainly through temporary unemployment. Although the impact was lower than in 2020, more than 850,000 workers still received at least one benefit for temporary unemployment in 2021, according to the annual report of the NEO on Thursday. 

2021 was the second year marked by COVID-19, and it was no different for the NEO. But the organisation points out that, despite the crisis, the labour market held up better than expected. The system of temporary unemployment, for example, offered protection against massive job losses. 

The annual report shows that in 2021, more than 850,000 workers still made use of this temporary unemployment, compared to almost 1.4 million in 2020. The victims of the flood in July 2021 were also entitled to temporary unemployment. 

Despite the current crisis, full, compensated unemployment (jobseekers and non-jobseekers combined, with or without company allowance) remained in 2021 at its lowest level since 1978. On an annual basis, their number fell by 8.4 percent. The average dropped to exactly 346,498 benefit recipients per month. 

"The labour market has shown itself to be remarkably resilient during the pandemic," said Jean-Marc Vandenbergh, Administrator General of the NEO. "The system of temporary unemployment has worked very well and has perfectly fulfilled its protective function as a compensation for the loss of economic activity. Moreover, only a small percentage of workers who were put on temporary unemployment subsequently ended up in conventional unemployment."

COVID-19 did have a financial impact on NEO measures. For example, real expenditure in 2021 amounted to €8.3 billion, whereas €6.2 billion had originally been budgeted. For 2020, those figures were 10.9 billion and 6.2 billion respectively. In total, the real expenditure for those two years amounted to €19.1 billion, or €6.8 billion more than budgeted. According to the NEO, the lion's share of the additional expenditure went to temporary unemployment.

In its outlook for 2022, the NEO points out that the catching-up of economic activity is wearing off. The challenges for the future are rising inflation, energy prices and the war in Ukraine. The NEO also expects that spending on social benefits, as a proportion of GDP, will fall to 1.39 per cent in 2022. In 2020 it was still 2.51 percent, in 2021 1.79 percent, as a result of the reduction of temporary unemployment.

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