Labour market slack – annual statistics on unmet needs for employment


Data extracted in June 2020

Planned article update: June 2021

Highlights
In 2019, one in six part-time workers in the EU (16.9 %) would have preferred to work more.
At EU level, persons available to work but not searching for it accounted for 5.6 % of the population outside the labour force in 2019, while persons seeking work but not immediately available stood at 1.6 %.
The labour market slack in the EU amounted to 13.2 % of the extended labour force, more than double the unemployment, which accounted for 6.4 % of the extended labour force in 2019.
Supplementary indicators to unemployment, definition and characteristics of the population
Persons aged 15-74, EU-27, annual average, 2019, (thousand persons)
Source: Eurostat (lfsi_sup_a)


In order to supplement the unemployment figures, this article focuses on people in categories that are not unemployed according to the ILO definition but may have an unmet need for employment, being either inside or outside the labour force. More precisely, this article reports on underemployed people, those working part-time but who wish to work more, as well as on 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. The analyses cover the situation in the European Union (EU) and in the Member States. The article concludes with a presentation of the entire labour market slack including these three supplementary categories in addition to the unemployment. Consequently, it nicely complements the article on unemployment statistics.

Full article

Overview of the underemployed and the potential additional labour force

A graphical description of the populations included in the indicators supplementing the unemployment rate, with their absolute and relative sizes at EU level in 2019, is presented in the infographic. It also shows their relation to the other main groups covered by the Labour Force Survey. The 6.4 million underemployed part-time workers are a sub-population of the 37.9 million part-time workers. The 8.5 million persons in the potential additional labour force are a sub-population of the 117.9 million persons outside the labour force.

The exact definitions of the three indicators are as follows: Underemployed part-time workers are persons working part-time who wish to work additional hours and are available to do so. Part-time work is recorded as self-reported by individuals. Jobless persons seeking a job but not immediately available for work are the sum of persons neither employed nor unemployed who: (a) were actively seeking work during the last 4 weeks but not available for work in the next 2 weeks; or (b) found a job to start in 3 months or less and are not available for work in the next 2 weeks; or (c) found a job to start in more than 3 months; or (d) were passively seeking work during the last 4 weeks and are available for work in the next 2 weeks. Jobless persons available for work but not seeking it are persons neither employed nor unemployed who want to work, are available for work in the next 2 weeks but are not actively seeking work.

The last two groups are jointly referred to as the potential additional labour force. All three groups together are referred to as supplementary indicators to unemployment. These three groups do not meet the full criteria of the ILO unemployment definition i.e. being without work, actively seeking work, and being available for work. However, while not being captured through the unemployment rate, these groups might still represent a form of employment demand. While underemployed part-time workers are part of the labour force, the two other groups (persons seeking work but not immediately available and persons available to work but not seeking) are part of the population outside the labour force. These supplementary indicators complement the unemployment and provide a more complete picture of the labour market.

Comparing supplementary indicators with unemployment

14.2 million unemployed and another 14.9 million persons with some unemployment characteristics

In 2019, there were 6.4 million underemployed part-time workers in the EU-27. In addition to this, 6.6 million persons were available to work, but did not look for a job, and another 1.9 million persons were looking for a job, without being able to start working within a short time period.

In total 14.9 million persons experienced some resemblance to unemployment in the EU-27 in 2019, without fulfilling the ILO criteria for being unemployed. It actually exceeds the 14.2 million who were unemployed according to the ILO criteria.

Unemployment changes substantially over time, but the number of people seeking work but not immediately available is stable

The overall size of the potential additional labour force was relatively stable from 2005 to 2019 at EU level, with a small decrease from 2005 to 2008 when it was at 9.0 million persons, and then a small and steady increase up to 2013-2014 (the largest recorded size, of 10.6 million persons), followed by a slow but constant drop again from 2015 to 2019, to 8.5 million persons (see Figure 1). This is in clear contrast to the development of the number of unemployed persons, which fluctuated heavily over the same period (19.4 million persons in 2005, 15.0 million persons in 2008, 23.7 million persons in 2013 and 14.2 million persons in 2019). The development in the same period for the underemployed part-time workers quite closely mirrors the potential additional labour force.

Figure 1: Underemployment, potential additional labour force and unemployment, people aged 15-74, EU-27, 2005-2019
(Millions of persons)
Source: Eurostat (une_rt_a) and (lfsi_sup_a)

Nevertheless, the split of the potential additional labour force into the two sub groups showed some differences over time (see Figure 1, finest lines): those who seek work but are not immediately available to work dropped continuously from 2.5 million in 2005 to 1.8 million in 2013 and slightly went up to 1.9 million between 2016 and 2019 while the persons available to work but who are not seeking it fluctuated from 7.3 million persons in 2005 to 8.8 million in 2013-2014 and dropping to 6.6 million persons in 2019, following a similar pattern to the number of unemployed persons.

Focus on underemployed part-time workers

More underemployed part-time workers in Spain and Greece, few in Czechia, Hungary and Bulgaria

Figure 2 shows the share of employed persons in each country that were part-time workers in 2019 as well as the share of employed people who were underemployed part-time workers. At European level, 3.2 % of the total employment consisted of underemployed people. Underemployment in the EU-27 was highest in Spain (6.2 % of total working persons), followed by Greece (6.0 %), France (5.1 %) and Cyprus (5.0 %), in comparison with Czechia (0.3 %), Hungary and Bulgaria (both 0.6 %) where underemployment is almost non-existent. Even though there is no striking pattern, the lowest occurrences of underemployed part-time workers tend to be in the eastern part of the EU. Outside the EU, the EFTA country Switzerland recorded a higher underemployment rate, reaching 7.1 % in 2019.

Figure 2: Part-time workers and underemployed part-time workers aged 15-74, 2019
(% of total employment)
Source: Eurostat (lfsa_sup_a) and (lfsa_epgaed)

Figure 2 shows also the percentage of part-time workers regardless the underemployment in each country in 2019. Part-time work may be considered as a risk of being in a job with too few working hours, and therefore underemployment might be somehow an accompanying feature of part-time employment, i.e. high shares of part-time workers may imply high shares of underemployed workers. However, Figure 2 suggests that it is not the case for all countries.

For example, in the European Union, total employment consisted of 19.0 % of part-time workers. In the Netherlands, it consisted of 51.0 % of part-time workers, of which 7.3 % were underemployed (relatively low compared to 16.9 % for the EU). This means that although part-time work was frequently applied in this country, a high share of part-time workers was satisfied with their situation (and not wishing to work more). In Romania, for example, it was the opposite. Part-time employment in Romania accounted for 7.1 % of the total employment but among the part-time workers, almost one third (i.e. 31.2 %) were underemployed. Among others, Italy is quite close to the average in terms of part-time employment (18.9 %) and also of underemployed people among part-time workers (15.0 %).

Moreover, regardless of the recourse to part-time employment at national level, some countries recorded high shares of underemployed part-time workers among the total part-time workers. This was the situation in 2019 in Greece (65.4 %), Cyprus (45.7 %), Spain (42.6 %) and Portugal (34.4 %) where more than one third of part-time workers wished to work more hours, while, as previously mentioned, the EU-27 average was 16.9 %. At the opposite end of the scale, Czechia, in addition to a low share of part-time workers in the total employment (7.4 %), has also a low share of part-time workers (4.4 %) that were underemployed.

Focus on the potential additional labour force

Potential additional labour force stood for 7.2 % of people outside the labour force in the EU-27

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 5.6 % of the total people outside the labour force in 2019. The other category is related to persons who seek work but are not immediately available to start working; this last group stood for 1.6 % of the total population outside the labour force.

All countries apart from Lithuania follow the same main pattern clearly visible in Figure 3: people available but not seeking work outnumber those seeking work but not immediately available.

Figure 3 presents the size of each subgroup as a proportion of the population outside the labour force for every EU-27 country in 2019. Both together, these categories give the potential additional labour force as a percentage of the population outside the labour force. Italy (15.3 %), Finland (12.9 %), Estonia (12.5 %) and Sweden (12.3 %) recorded more than one out of ten persons outside the labour force in the potential additional labour force. In Czechia (1.7 %), Romania (2.0 %), Malta (2.1 %) and Slovenia (2.3 %), this is the opposite situation: these countries recorded the lowest shares of potential additional labour force compared to the population outside the labour force, each below 3 %.

Inside the potential additional labour force, there are also notable differences between countries. For instance, there were exceptionally few in the population outside the labour force who were available to work but not seeking a job in Czechia (1.2 %), Lithuania (1.4 %) and Slovenia (1.7 %), whereas these are relatively more numerous in Italy (14.7 %) and Estonia (10.4 %). Also the share of those who are seeking work but not immediately available varies greatly across countries: their proportion is relatively high in Sweden (5.8 %), Finland (4.7 %) and the Netherlands (4.0 %), while they are almost non-existent in Hungary, Malta and Czechia (all three reaching 0.5 % or less).

Figure 3: Potential additional labour force by its sub-groups, people aged 15-74, by country, 2019
(% of people outside the labour force)
Source: Eurostat (lfsi_sup_a)

Age, gender and education of people in the supplementary categories

More women among underemployed part-time workers

At European level, there are more women than men among underemployed part-time workers in all age groups. Around two thirds of those who are underemployed between 25 and 54 years old and between 55 and 74 years old are women in 2019 (precisely, 68.3 % and 65.9 %). The differences between men and women are a bit smaller for the youngest age group in which women accounted for 57.7 % of the young underemployed people.

Figure 4: Supplementary indicators to unemployment by sex and age, EU-27, 2019
(Millions of persons)
Source: Eurostat (lfsi_sup_a)

For men and women who seek work without being able to start working immediately, differences although less obvious also appear in the EU-27 in 2019. In the youngest age group (15-24) and the oldest age group (55-74), there is almost no difference in the number of men and women. In the middle age group women outnumber men, but not by very much (57.1 % against 42.9 % for men).

Furthermore, among those who would be available to work, but who are not looking for a job, there are more men aged 15-24 than women (54.0 % against 46.0 %), but more women than men for both age groups 25-54 and 55-74 in which women stand for respectively 60.7 % and 53.9 % of the total age groups.

The largest single group in Figure 4 is clearly underemployed women aged 25-54 years.

People with medium education level are comparatively more underemployed than people with low and high education level

Educational level is another classical background variable often used to explain labour market outcomes. Figure 5 shows that, at European level, the number of underemployed part-time workers is highest for those, both for men and women, with a medium level of education (defined as upper secondary and post-secondary non-tertiary education), at 2.0 million for women and 0.9 million for men in 2019. The amount of underemployed women with lower education (1.1 million) is almost the same as for those with higher education (i.e. tertiary level) (1.2 million). The smallest group of underemployed persons is men with higher education (0.5 million). Regarding persons available but not seeking, the EU-27 recorded roughly the same number i.e. 1.6 million for women with low education level and with medium education level while men showed bigger differences: 1.4 million for men with education low level against 1.2 with medium education level. Among those who seek work but are not available to start immediately, differences between men and women almost disappear for those with lower and medium level education, but are slightly more noticeable among those with higher education (0.3 million for women against 0.2 million for men).

Regardless of gender, among people available to work but not seeking, people have most likely attained a low education level, while for the other two indicators, i.e. people seeking but not immediately available and underemployed people, the greatest number is found for people with a medium level of education. People with tertiary education level were the smallest group in all the supplementary categories compared with people with low and medium education level.

Figure 5: Supplementary indicators to unemployment by sex and education, people aged 15-74, EU-27, 2019
(Millions of persons)
Source: Eurostat (lfsa_sup_edu)

Labour market slack in the EU-27

Labour market slack refers to all unmet needs for employment, including unemployment according to the ILO definition as well as the three supplementary indicators described in this article. In order to allow comparisons between 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 (two categories outside the labour force), i.e. those available but not seeking, and those seeking but not available. The total labour market slack is 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 European level, the development of the labour market slack seems to follow and emphasize the development of the unemployment (according to ILO) which is one of its components (see Figure 6). The unemployment fluctuations are however more pronounced than the variations of the other three components, more stable overtime but still connected to the economic situation. The labour market slack accounted for 14.0 % of the extended labour force in 2008 and for 13.2 % in 2019, with the highest value found in 2013 i.e. 19.5 %. Based on the annual data, the unemployment (ILO) in 2019 stood for 6.4 % of the extended labour force in the EU-27, about half of the value of the labour market slack.

Figure 6: Labour market slack by its components, people aged 15-74, EU-27, 2008-2019
(% of extended labour force)
Source: Eurostat (lfsi_sla_a)

In 2019, the labour market slack was the highest in Greece (24.5 %), Spain (22.7 %), Italy (21.5 %), France (16.1 %) and Finland (15.8 %), all above 15 % of the extended labour force (see Figure 7). Once again, the link between having a high labour market slack and a high unemployment rate is partially verified as the highest unemployment rates in the EU-27 in percentage of the extended labour force are also found in Greece (16.8 %), Spain (13.6 %), Italy (9.0 %), France (8.2 %). Finland ranked 7th with an unemployment rate of 6.3 %.

However, the weight of unemployment in the total labour market slack varies from one country to another, leaving the other components (like the underemployed people, people available for work but not seeking it and those seeking work but not immediately available) relatively more substantial. In 2019, in the Netherlands, Ireland and Finland, unemployment consisted of less than 40 % of the total slack while the three supplementary indicators accounted for more than 60 %. Unemployment stood for 31.0 % of the total labour market slack in the Netherlands, 35.4 % in Ireland and 39.9 % in Finland. In the EU-27, almost half of the slack, 48.9 %, consisted of unemployed people. On the opposite end, in Lithuania, Greece and Slovakia, unemployment accounted for more than two thirds of the total labour market slack.

Figure 7: Labour market slack by its components, people aged 15-74, by country, 2019
(% of extended labour force)
Source: Eurostat (lfsi_sla_a)

Data sources

All figures in this article are based on the 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.

Reference period: Yearly results are obtained as averages of the four quarters in the year.

Coverage: The results from the survey currently cover all European Union Member States, the United Kingdom, the EFTA Member States of Iceland, Norway, Switzerland, as well as the candidate countries Montenegro, North Macedonia, Serbia and Turkey. For Cyprus, the survey covers only the areas of Cyprus controlled by the Government of the Republic of Cyprus.

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

These three indicators supplement the unemployment rate, thus providing 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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LFS main indicators (lfsi)
Unemployment - LFS adjusted series (une)
Supplementary indicators to unemployment - annual data (lfsi_sup_a)
Supplementary indicators to unemployment - quarterly data (lfsi_sup_q)
LFS series - Detailed annual survey results (lfsa)
Total unemployment - LFS series (lfsa_unemp)
Supplementary indicators to unemployment by sex and age (lfsa_sup_age)
Supplementary indicators to unemployment by sex and educational attainment level (lfsa_sup_edu)
Supplementary indicators to unemployment by sex and citizenship (lfsa_sup_nat)
LFS series - Detailed quarterly survey results (lfsq)
Total unemployment - LFS series (lfsq_unemp)
Supplementary indicators to unemployment by sex and age (lfsq_sup_age)
Supplementary indicators to unemployment by sex and educational attainment level (lfsq_sup_edu)