Archive:Key figures on the changes in the labour market
Data extracted in April 2021
Planned article update: July 2021
Highlights
The winding down due to the COVID-19 pandemic has hit the economic activity and therefore the labour market. It visibly prejudiced employment but also moved out people from unemployment by affecting their availability or the job search. This article aims at providing an overview of the last changes in the labour market, looking simultaneously at the development with respect to employment, the entire unmet demand for employment i.e. the Labour Market Slack and people who are neither employed, available to work nor seeking. All three categories together refer to the entire population. More precisely, the groups constituting the labour market slack are the unemployed people, those fulfilling the three requirements expressed by the International Labour Office (ILO), namely being available to work, searching for work and not being employed; the underemployed part-time workers, those part-time workers who wish to work more; and, the so-called additional potential labour force. The additional potential labour force refer to people who are not unemployed but either they are available to work and want to but do not search or they search without being immediately available.
This article used quarterly and seasonally adjusted Labour Force Survey (LFS) data. It investigates the impact of the COVID-19 crisis on the overall population aged 15-74 and aims at showing the effects at the EU level and in the respective Member States as well as in the EFTA countries and candidate countries. The following article is part of the online publication Labour market in the light of the COVID 19 pandemic - quarterly statistics alongside the articles Employment, Absences from work and Hours of work.
Full article
Why is looking at unemployment not enough?
The Labour Market Slack, including unemployment but also supplementary categories, together with employment better reflect the consequences of the economic crisis
Over the last quarters, the economic downturn affected employment. At European level, the employment rate, corresponding to the share of employed people in the total population, stood for XX% in Q4 2019, consecutively accounted for XX% in Q1 2020, XX% in Q2 2020, XX% in Q3 2020 and XX% in Q4 2020. Similarly to what happened at European level, the share of employed people also decreased in all EU Member States over the last quarters, although to different extent and in few cases, at different point of time. Usually, in case of economic crisis, unemployment including people being jobless, available and looking for a job is the main indicator to report on the deterioration of the Labour Market. Nevertheless, the nature of the COVID-19 crisis, being first a health crisis before becoming an economic crisis, changed the reference frame. The measures taken by European governments to contain the spread of the virus, disturbed business and public entities like schools. Therefore, jobless people who would have been available to work and would have sought a job, might have given up their search because of modest return expectations or might have been no longer immediately available because of taking care of children. These people still attached to the Labour market but facing exceptional circumstances cannot be considered “unemployed” but are included in the labour market slack, revealing therefore better the unmet demand for employment. In addition to unemployed people and underemployed part-time workers, the Labour market includes also the potential additional labour force i.e. people still being available to work but not searching or searching but not immediately available. While the labour force only includes employed and unemployed people, the extended labour force includes also the aforementioned potential additional labour force.
At European level, as previously said, XX% of the total population aged 15-74 was employed in Q4 2020 while XX% faced an unmet demand for employment. This share is broken down as followed: XX% were underemployed part-time workers, XX% were unemployed according to ILO criteria, XX% were seeking work but not immediately available and XX% were available to work and want to but not seeking. The remaining population which accounts for XX% of the total population is considered outside the extended labour force which means they are jobless persons neither available to work nor seeking.
_in_the_EU_(in_%25_total_population_aged_15-74,_Q4_2020).png)
(in % total population aged 15-74, Q4 2020)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
Specific developments quarter by quarter in the EU
Over the last quarters, visible changes occurred on the labour market. From Q4 2019 to Q1 2020, at the very beginning of the health crisis, the slight decrease in employment (-XX p.p.) at EU level was offset by an increase in the share of people available to work but not seeking. In the following quarter, Q2 2020, characterised by the first lockdowns, the share of employed people dropped by XX%. Even if in most countries, measure have been taken to minimise the employment losses, it is widely assumed that enterprises froze or reduced the hiring or did not renew temporary contracts as showed in these articles. This fall in employment produced an increase in the Labour market slack (+XX%) and in the share of people outside the extended labour force, those neither seeking nor available (+XXp.p.). The rise in the Labour Market slack was mainly due to an increase in the share of people available but not seeking (+XXp.p.) while the share of unemployed people remained stable. From Q2 2020 to Q3 2020, corresponding to the summer times and the restart to a certain degree of many businesses, the employment rate of people aged 15-74 went up by XXp.p. to reach XX%. This upturn was accompanied with a slight decline in the slack (-XXp.p.). About this period, it seems that people started again looking for a job and were available as the near stability of the slack hided a noticeable increase in the share of unemployed people fulfilling the ILO criteria (+XX%) offset by a decrease of people available to work but not seeking (-XX%). In addition, the share of people outside the extended labour force neither available nor seeking also recorded a drop of XXp.p. Compared to the previous quarter, the share of employed people XXX in Q4 2020 showing XX. In parallel, the slack XXX mainly because of a XXXX.
(in percentage points, population aged 15-74)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
Sharpest declines in employment in Estonia and Spain
Looking at the quarterly developments among EU Member States, not all countries underwent in the same way in terms of employment. The vast majority was impacted the most in Q2 2020 when the employment rate declined in 17 out of 27 EU countries by 1p.p. or more. Estonia and Spain reported the most substantial decreases quarter-on-quarter among Member States over the past year. The share of employed people in Estonia dropped by 2.9p.p. and by 2.7p.p. in Spain in the second quarter 2020. Ireland and Lithuania reported the third and the fourth biggest fall in the employment rate, as it went down by 2.0p.p. in the second quarter. However, Latvia reported its biggest decrease in the first quarter 2020 (-XXp.p.) and Luxembourg in the third quarter 2020 (-XXp.p.). The slack rose the most in XXX in the second quarter 2020 and turned back more than in other countries in Q3 2020 in XXX. The share of people outside the extended labour force went up sizably in Q2 2020 in XXX and went down the most in Q3 2020 in XXXXX. Between Q3 2020 and Q4 2020, the employment rate kept on increasing in most countries but to a lesser extent than the growth reported between the two previous quarters i.e. Q2 and Q3 2020. Nevertheless, Finland and XXXX does not follow this pattern as the employment rate dropped by XXp.p. between Q3 and Q4 2020. Over the same period, the Labour market slack kept on going down as long as the employment rate recovers except in XXXXX.
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(Compared with the previous quarter, in percentage points)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
Where we were before 2020 and at the end of 2020?
Comparing Q4 2020 with Q4 2019, the quarter just before the start of the health crisis with the last quarter somehow provides an indication of the potential recovery of the labour market. In Q4 2020, almost none countries retrieved the level of employed people before the crisis. The two exceptions is Malta and Greece where the employment rate in Q4 2020 exceeds the employment rate in Q4 2019 (respectively +0.4p.p. and +0.2p.p.). The most affected countries that lost 2p.p or more between both quarters are Estonia (going down from XX% to XX%, so - XXp.p.), Spain (from XX% in Q4 2019 to XX% in Q4 2020, -XXp.p.). Decreases of 2p.p. were reported by Lithuania, Portugal and Sweden. The cut in the employment rate in Ireland, Bulgaria, Finland, Italy, Austria, Netherlands, Slovenia, Cyprus, Czechia and Denmark was between -1.9 p.p. and 1.0 p.p. and between -0.9 and 0.5p.p. in Romania, Slovakia, Luxembourg, Latvia, Belgium, Germany and Croatia. The weakest decreases in the share of employed people were found in Hungary (-XXp.p), Poland, France and France (metropolitan). With respect to the unmet demand of employment, the slack in Q4 2020 exceeded by more than 2p.p. its level from Q4 2019 in Estonia (+XXp.p.), Lithuania (+XXp.p.), Sweden (+XXp.p.), Ireland (+XXp.p.) and Spain (+XXp.p.). Only in Poland and Greece, the unmet demand for employment in Q4 2020 is less substantial than in Q4 2019.
_in_Q4_2019_and_in_Q4_2020_by_EU_Member_States_(in_%25_of_total_population_aged_15-74).png)
(in % of total population aged 15-74)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
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Who were the most affected by the crisis?
Based on the evolution of the Labour market slack by age group, the increase of the unmet demand for employment as percentage of the extended labour force between Q1 2020 and Q3 2020 was sharp among young people aged 15-24 (+XXp.p. between both quarters), much more than for those observed for people aged 25-54 (+XXp.p.) and for people aged 55-74 (+XXp.p.). Nonetheless, the decrease of the slack in Q3 2020 compared with Q2 2020 among young people was also more substantial (-XX%) than for the other age groups: -XX% for people aged 25-54 and stable for people aged 55-74. The employment of young people fell in the EU by XXp.p., from XX% to XX% from Q1 to Q2 2020, increase by XXp.p. between Q2 and Q3 2020 and slower, by XXp.p. between Q3 2020 and Q4 2020. The recovery is not completed as the difference between Q4 2019 and Q4 2020 is still XXXp.p., XX% against XX%.
(% of the extended labour force)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
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(in % of the total population)
Source: Eurostat (lfsi_emp_q)
Looking at the Figure XX that reports on the quarterly development of the population aged 15-24 by country, it is clearly visible that a country showing a low share of the unmet demand for employment does not automatically show a high share of employed people in the total population. This finding seems to be structural as it was observed before the start of the COVID-19 crisis. Young people standing outside the extended labour force, so those who are not employed, neither available to work and nor seeking vary significantly among countries. This might be due to being fully dedicated to their studies or by standing outside the labour market (further details on the concepts cf. article on NEET + Youth https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Participation_of_young_people_in_education_and_the_labour_marke). For example, the employment rate of young people exceeds 40% in all quarters from Q4 2019 to Q4 2020 in Malta, Germany, Austria, the Netherlands and Denmark but Malta recorded in Q4 2020 a relatively low slack of XX% of the population while Denmark recorded a slack of almost 20%. On the other hand, lower employment rates can be associated to lower slacks, as it is the case in Bulgaria or Slovakia. Nevertheless, an increase in the unmet demand for employment nevertheless often accompanies a decrease in the employment rate. This means that the development of the categories seems a bit more connected that the level itself of the slack or employment. The evolution in the slack appears like the mirror evolution of the employment in some countries like Lithuania or France XXXX. However, this was not always the case as it occurred in Bulgaria or Slovenia where the Labour market slack did not offset a decrease in the employment share. XXX, XXX and XXX highlight visible differences among age groups. Young people were more affected in than the two other With respect to the population aged 25-54, the employment rate that was higher than 75% in all countries in Q4 2020 except in XX, in XX and XX fluctuated much less over the last quarters than for young people and even older people (55-74). However, drops equal or exceeding 2p.p. have been reported in Lithuania (-2.2p.p. and 2.0p.p), Portugal (-2.1p.p.), Bulgaria (-2.3p.p.) and Spain (-3.4p.p.) in Q2 2020. Among people aged 55-74, a relevant finding is that before 2020, the employment rate grew on a continuous way (cf artice on employment) due to policies over the EU aiming at maintaining older people in employment (EU object). Since the beginning of the COVID Crisis the rate is quite stable for the first time since XXX, that is already a “””””first sign of weakening””””. At national level, XXXXXX
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(in % of the total population)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
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(in % of the total population)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
.png)
(in % of the total population)
Source: Eurostat (lfsi_sup_q) and (une_rt_q)
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