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According to the new EU Employment and Social Situation Quarterly Review, after a moderate recovery during 2010 and early 2011, the European labour market contracted again in the second half of 2011.
Reflecting the modest contraction in the economy in the fourth quarter of 2011, all large Member States, including Germany, are now facing deteriorating labour market prospects, while productivity growth is adversely impacted across the EU. However, the growth in permanent contracts has remained positive, whereas temporary employment lost momentum.
Since spring 2011 some 1.6 million Europeans have joined the ranks of the unemployed, with the unemployment rate hitting a new high at 10.1 % in January 2012. The unemployment rebound has again hit men hardest, while the youth unemployment rate reached a historic high at 22.4 % in the EU in January 2012. The deterioration is also mirrored by the increase in the share of young people neither in employment nor in education or training (NEETs).
On the other hand, the analysis of the joint movement of unemployment rates and labour shortage indicators (Beveridge curve) shows a tendency towards a higher level of vacancies for a given unemployment rate in the EU.
The social situation remains worrying, although recent consumer surveys indicate a moderate decline over recent months in the share of households experiencing financial distress across the EU, while major contrasts persist according to the level of household income.
Ultimately, children have been more affected by the crisis than the rest of the population, mainly because they live in households headed by working-age adults who were directly hit by rising unemployment.
Social protection expenditure now accounts for nearly 30% of GDP in the EU. The redistributive impact of this spending is important. In the absence of social transfers, the poverty risk would be considerably higher than the actual at-risk-of poverty rate of 16%.
In February 2012, employment expectations remained depressed in the tertiary sector and in construction in most Member States, whereas they remained broadly optimistic in industry. The latest Commission's interim forecast revised EU GDP growth downwards for 2012, with an expected weak GDP upturn in the second half of the year unlikely to lift employment prospects anytime soon.
Looking ahead, the transition towards a greener economy is expected to have a significant impact on employment and skills demand at the level of industries and enterprises.
This edition of the Quarterly Review analyses the situation in the agricultural sector and takes a closer look at the labour markets and social situation in Denmark, Finland, France, Greece, Italy, Latvia and Romania.