Archive:Labour market slack - unmet need for employment - quarterly statistics
Data extracted in July 2020
Planned article update: October 2020
Highlights
The health crisis due to the COVID-19 has become in the European Union, like in other parts of the world, an economic crisis. It is highly expected and, even, already observed, that the outcomes of the economic storm impact significantly the EU-27 labour market. Concretely, given the lock-down and the impending recession, some people may have lost their job or lost even the opportunity to start a new one. In addition, people who were previously considered unemployed by fulfilling the ILO requirement of searching for work might have given up their search for a certain period of time due to the poor economic prospects or the shut-down of the enterprises' activity moving them outside the labour force. It is therefore assumed that beyond unemployment, more jobless people either inside or outside the labour force may have an unmet need for employment. This whole potential demand for employment (the unemployed and the supplementary categories) constitute the labour market slack.
This article based on quarterly LFS data investigates the impacts of the crisis on the whole labour market slack but also provides an overview on its specific component elements which are: unemployed people (ILO), underemployed people (those part-time workers who wish to work more) and, people who might be associated to the labour force, because of their availability to work or their work search, but who are not recorded as such. This last category of people is called the potential additional labour force.
Both the European and the country approach are taken in this article. It aims at showing the effects of the crisis at the global European level as well as at the national level, in the respective [Glossary:EU_Member_States|Member States]], as well as for the United Kingdom, two EFTA countries (Norway and Switzerland) and three candidate countries (North Macedonia, Serbia and Turkey).
The article is a part of the online publication Labour market in the light if the COVID 19 pandemic - quarterly statistics alongside namely with the articles Absences from work and Hours of work.
Note: This article uses the seasonal adjusted data from the first quarter of 2020 i.e. January-March (2020Q1) which is compared in some sections to the last quarter of 2019 (2019Q4). It is highly expected that the consequences of the COVID-19 crisis on the labour market will be more visible in the second quarter of 2020 data (April-June) given the COVID-19 measures taken in many countries.
Full article
Labour market slack in the EU-27
The labour market slack refers to all people with unmet needs for employment, including unemployed people according to the ILO definition as well as the underemployed part-time workers, people available to work but not seeking and people searching for work but not available. People in these last two categories are outside the labour force.
In order to allow analysis of these four groups, which do not all belong to the labour force, the concept of the “extended labour force” is used. It includes people in the labour force (unemployment and employment) and in the potential additional labour force, i.e. those available but not seeking, and those seeking but not available. The labour market slack is then expressed in percent of this extended labour force, and the relative size of each component of the labour market slack can be compared by using the extended labour force as denominator.
At the European level, people with an unmet need for employment accounted, during the first quarter 2020, for 13.3 % of the extended labour force as shown in the first graph of Figure 1. The slack was more pronounced for women, who stood at 15.6 % of the extended labour force, than for men (11.3 %).
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(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
Highest share of people with unmet demand for employment in Greece, Spain and Italy, where it exceeds 20 % of the extended labour force
Among EU Member States, Greece, Spain and Italy recorded the highest slacks reaching more than one fifth of the extended labour force (more precisely 23.1 % for Greece, 22.6 % for Spain and 21.3 % for Italy). Those countries also recorded the biggest gender gaps observed in the slack: 28.8 % for women against 18.6 % for men in Greece, 27.6 % against 18.1 % in Spain and 26.3 % against 17.2 % in Italy. Only in three EU Member States, namely, Latvia, Lithuania and Romania, the labour market slack of men exceeded slightly (by less than 2 percentage points (p.p.)). the one of women. The lowest labour slacks in the EU-27 were observed in Malta, Poland and Czechia with less than 6 % of the extended labour force facing an unmet demand for employment, with slacks corresponding to 5.9 %, 5.7 % and 2.9 % of the extended labour force respectively.
Evolution over time of the labour market slack
Increase in the labour market slack in two thirds of the Member States, with the biggest increases in Latvia, Germany and Luxembourg
The development of the labour market slack from the last quarter of 2019 to the first quarter of 2020 might reflect the consequences of the health crisis. The labour market slack in the European Union increased by 0.4 p.p. between the last quarter of 2019 and the first quarter of 2020, from 12.9 % to 13.3 %. This is the first time it has increased since the first quarter of 2013, as it can be seen from the dynamic tool at the top of the article.
This increase at the European level is also recorded in exactly two thirds of the EU countries. In contrast, the labour market slack decreased from the last quarter of 2019 to the first quarter of 2020 in nine countries. Latvia, Germany and Luxembourg recorded the greatest increases among Member States (second graph of Figure 1). In Latvia, the labour market slack rose, between the last quarter of 2019 and the first quarter of 2020, from 11.8 % to 13.9 % of the extended labour force (+2.1 p.p.), in Germany from 7.5 % to 9.4 % (+1.9 p.p) and in Luxembourg from 11.4 % to 13.0 % (+1.6 p.p). The biggest decreases recorded among EU countries accounted for less than 1 p.p. and were registered in Greece (-0.6 p.p.), the Netherlands, France and Belgium (-0.4 p.p. for all three).
Biggest gender differences in the evolution of the slack in Estonia, Malta and Latvia
At European level, women registered between the last quarter of 2019 and the first quarter of 2020 an increase of the slack, in percentage of the extended labour force, slightly higher than men (+0.5 p.p. for women and +0.4 p.p. for men).
However, the biggest gender-based differences observed in the Member States showed a greater increase in the male labour market slack than in the female one: in Estonia, the labour market slack went up from 7.7 % to 9.6 % (+1.9 p.p.) for men but decreased from 10.4 % to 10.1 % for women (-0.3 p.p.). The same findings can be found in Malta (+0.4 p.p. for men and -1.0 p.p. for women) and in Latvia (+2.9 p.p. for men and +1.5 p.p. for women).
Labour market slack higher among young people
Based on the latest data, the population aged 15-24 registered higher labour market slack than the population aged 25-54 and 55-74 (see Figure 2). Moreover, the highest shares of labour market slack among young people in the first quarter of 2020 were observed in Greece, Spain and Italy where almost half of the young people of the extended labour force is recorded in the slack (49.1 %, 48.3 % and 46.7 %). In contrast, the slack concerned less than 15 % of young people in the extended labour force in Czechia, Malta and Poland (respectively 7.6 %, 13.1 % and 14.3 %). The two age categories 25-54 and 55-74 correspond to similar share of slack in the extended labour force and show smaller differences between countries.
The development over time of the slack for young people seems to be more pronounced than for older people. From the last quarter of 2019 to the first quarter of 2020, the slack increased at the European level for all three age categories but to a different extent: from 26.8 % to 27.6 % (+0.8 p.p.) for people aged 15-24, from 11.7 % to 12.0 % (+0.3 p.p.) for people aged 25-54 and from 10.6 % to 11.2 % (+0.6 p.p.) for people aged 55-74.
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
Composition of the labour market slack
Share of unemployment in the labour market slack is at its lowest and potential additional labour force at its highest since 2008
The weight of unemployment in the total labour market slack in the EU-27 varies over time and across countries, leaving the other components (like the underemployed people, people available for work but not seeking it and those seeking work but not immediately available) more or less substantial according to the country and the period.
In the first quarter 2020, in the EU-27, less than half of the slack (46.7 %) consisted of unemployed people. The share of unemployment in the slack consequently reached its minimum since the beginning of the time series (the first quarter of 2008). In contrast, the share of the potential additional labour force was in the first quarter of 2020 at its highest level since 2008, reaching 32.3 % of the total labour market slack. Finally, the underemployed part-time workers accounted for 21.1 % of the total slack, this share decreasing very slightly along the last quarters.
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
As seen in Figure 3, in the first quarter 2020, the structure of the labour market slack is considerably different according to the countries. In Denmark, Finland, Austria, Italy, Germany, Ireland and the Netherlands, unemployment stood at less than 40 % of the total national slack while the underemployed part-time workers and people in the additional labour force accounted together for more than 60 %. On the other hand, unemployment accounted for more than two thirds of the total labour market slack in Lithuania, Slovakia and Czechia,.
Focus on unemployment
Unemployment (ILO) is one component of the labour market slack. In the EU-27, it stood at 6.2 % of the extended labour force in the first quarter of 2020, but reaching 6.5 % for women and 5.9 % for men (see Figure 5).
In Greece and Spain, more than one in ten persons in the extended labour force was unemployed in the first quarter of 2020 (14.9 % and 13.4 % respectively). Moreover, the gap between men and women was the highest in these two countries. Female unemployment in Greece accounted for 17.8 % and male unemployment for 12.5 % (difference of 5.3 p.p.). In Spain, unemployment stood at 14.9 for women against 12.0 % for men (difference of 2.9 p.p.).
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
On the other hand, six EU Member States registered an unemployment rate smaller than 4 % of the extended labour force: Czechia (1.9 %), Poland (2.8 %), the Netherlands (2.9 %), Malta (3.3 %), Germany (3.4 %) and Hungary (3.5 %). All these countries moreover recorded a gender gap smaller than 0.7 p.p.
Also visible from the dynamic tool by choosing unemployment (ILO) and from the Figure 5, the unemployment rate is quite stable at the European level between the last quarter of 2019 and the first quarter of 2020 (-0.1 p.p). Latvia, Estonia and Luxembourg, where the unemployment stood in the first quarter of 2020 at 6.6 %, 4.5 %, 6.0 % respectively, recorded the most substantial increases compared to the last quarter 2019 (+0.8 p.p., +0.6 p.p. and +0.5 p.p. respectively). In contrast, the share of unemployed people in the extended labour force decreased, from the last quarter of 2019 to the first quarter of 2020, in Greece, Italy and France by 1.1 p.p., 0.6 p.p. and 0.4 p.p. respectively.
Focus on underemployed part-time workers
High share of underemployed part-time workers in Greece, Spain, Cyprus, Ireland and France, very low share in Czechia and Bulgaria
Inside the extended labour force, the highest shares of part-time workers unsatisfied with their situation and wishing to work more were found in the first quarter 2020 in Greece, Spain, Cyprus, Ireland and France (both France and France Metropolitan). In all those countries, more than 4 % of the extended labour force were underemployed part-time workers. More precisely, 4.8 % in Greece, 4.7 % in Spain and Cyprus%, 4.4 % in Ireland, 4.1 % in France (both France and France Metropolitan) of people in the extended labour force had part-time jobs and wanted to work more hours. In contrast, less than 0.5 % of the extended labour force in Czechia and Bulgaria were underemployed part-time workers (0.4 % and 0.2 % respectively) making them a relatively marginal phenomenal in those countries.
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
Focus on the potential additional labour force
Potential additional labour force increased in 18 EU Member States, was stable in 6 and decreased in 3
As already mentioned, the potential additional labour force consists of two subgroups. One category includes people who are available to work but do not seek it. At European level, this category accounted for 6.1 % of the total people outside the common labour force (not extended one) in the first quarter 2020. The other category is related to persons who seek work but are not immediately available to start working; this last group stood for 1.9 % of the total population outside the labour force (see Figure 6). In total, 8% of the population outside the (not extended) labour force are actually connected to employment by expressing a certain willingness or demand for work. All countries apart from Lithuania follow the same main pattern clearly visible in Figure 6: people available for work but not seeking outnumber those seeking work but not immediately available.
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
The size of the potential additional labour force now in proportion of the extended labour force is displayed in Figure XX. In Italy, during the first quarter 2020, 10.4% of people in the extended labour force were people who were available for work but not seeking or seeking but not immediately available, followed by Finland, Croatia and Luxembourg that also recorded percentages higher than 5% (precisely, 6.4, 5.9 and 5.2). Less than one percent of the extended labour force consisted of people available for work and not seeking and seeking but not immediately available in Romania (0.4) and in Czechia (0.7). Gender differences can be noticed at the European level, women standing at 5.1% and men at 3.6% (see Figure 7).
(% of extended labour force)
Source: Eurostat (lfsi_sla_q)
In seven out of 27 EU Member States, there are comparatively more inactive people who are available for work but not seeking or seeking and not available than unemployed people in the extended labour force. This is the case in Germany (difference of 0.9p.p between both indicators), Italy (0.7p.p.), Finland and Netherlands (0.5p.p.), Estonia (0.2p.p.), Ireland and Austria (0.1p.p.).
It is clearly visible that the potential additional labour force is the component of the Labour market slack for which the change between both quarters is the most visible. Indeed, the share of people seeking and not available together with those available but not seeking increased in the majority of the EU Member States namely, 18 countries. In other six, the share in the extended labour force was stable and in three, it decreased. The sharpest change in the share of this category in the extended labour force had been observed between the last quarter of 2019 and the first quarter 2020 in Germany (+1.5p.p.), Spain, Greece and Austria (all three +0.6p.p.). It is therefore assumed that the Covid crisis implied that some people might have moved out from the classic labour force because of the lack of search for work or the impossibility to take new professional opportunity, these people being stuck outside the common labour force as they are even not unemployed if they are not actively seeking but visible still in the extended labour force.
Source data for tables and graphs
Data sources
All figures in this article are based on seasonally adjusted quarterly results from European labour force survey (EU-LFS).
Source: The European Union labour force survey (EU-LFS) is the largest European household sample survey providing quarterly and annual results on labour participation of people aged 15 and over as well as on persons outside the labour force. It covers residents in private households. Conscripts in military or community service are not included in the results. The EU-LFS is based on the same target populations and uses the same definitions in all countries, which means that the results are comparable between countries.
European aggregates: EU refers to the sum of EU-27 Member States. If data are unavailable for a country, the calculation of the corresponding aggregates takes into account the data for the same country for the most recent period available. Such cases are indicated.
Definitions: The concepts and definitions used in the labour force survey follow the guidelines of the International Labour Organisation.
Five different articles on detailed technical and methodological information are linked from the overview page of the online publication EU labour force survey.
Context
The COVID-19 virus hit Europe in January and February 2020, with the first cases confirmed in Spain, France and Italy. COVID-19 infections have now been diagnosed in all European Union (EU) Member States.
To fight the pandemic, EU Member States have taken a wide variety of measures.
From the second week of March, most countries closed retail shops apart from supermarkets, pharmacies and banks. Bars, restaurants and hotels have also been closed. In Italy and Spain, non-essential production was stopped and several countries imposed regional or even national lockdown measures which further stifled the economic activities in many areas.
In addition, schools were closed, public events were cancelled and private gatherings (with numbers of persons varying from 2 to 50) were banned in most Member States.
The large majority of the prevention measures were taken during mid-March 2020 and most of the prevention measures and restrictions were kept for the whole of April and May 2020.
The first quarter 2020 is consequently the first quarter in which the labour market across the EU has been affected by COVID-19 measures taken by the Member States.
Employment and unemployment as defined by the ILO concept are, in this particular situation, not sufficient to describe the developments taking place in the labour market. In this first phase of the crisis, active measures to contain employment losses led to absences from work rather than dismissals, and individuals could not search for work or were not available due to the containment measures, thus not counting as unemployed.
The three indicators supplementing the unemployment rate presented in this article provide an enhanced and richer picture than the traditional labour status framework, which classifies people as employed, unemployed or outside the labour force, i.e. in only three categories. The indicators create ‘halos’ around unemployment. This concept is further analysed in a Statistics in Focus publication titled 'New measures of labour market attachment', which also explains the rationale of the indicators and provides additional insight as to how they should be interpreted. The supplementary indicators neither alter nor put in question the unemployment statistics standards used by Eurostat. Eurostat publishes unemployment statistics according to the ILO definition, the same definition as used by statistical offices all around the world. Eurostat continues publishing unemployment statistics using the ILO definition and they remain the benchmark and headline indicators.
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