Archive:Labour market slack - unmet need for employment - quarterly statistics
Data extracted in October 2020
Planned article update: January 2021
The health crisis due to the COVID-19 has become in the European Union, like in other parts of the world, an economic crisis. As expected, the outcomes of the economic storm have started impacting the EU-27 labour market significantly in the course of the second quarter 2020. More specifically, given the lock-down measures and the economic slowdown, some people may have lost their employment, have lost the opportunity to start a new job or to be renewed, or were obliged to work less hours than expected.
In addition, people who were previously considered as unemployed by fulfilling the ILO requirements of being available for work and searching for it, 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, which consequently moves them outside the labour force. Some other people might have become not available for work, as taking care of their children for example, leading them also outside the labour force, especially during the lock-down that occurred in many countries during the second quarter of 2020.
It is therefore assumed that beyond unemployment, more 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) constitutes the labour market slack.
More precisely, the groups constituting the labour market slack are the unemployed people (according to the ILO definition), the underemployed part-time workers (those part-time workers who wish to work more) and, people who might be associated to the labour force but who are not recorded as such because they do not fulfill one of the three ILO requirements of availability to work, work search and being not employed. This last group of people is called the potential additional labour force.
This article is based on quarterly and seasonally adjusted LFS data and investigates the impact of the COVID-19 crisis on the whole labour market slack; it also provides an overview of its specific components. Both the European and the country approach are presented in this article, which shows the effect of the COVID-19 crisis at the global EU level and at the national level in the respective Member States as well as in the United Kingdom, three EFTA countries (Iceland, Norway and Switzerland) and three candidate countries (North Macedonia, Serbia and Turkey).
This article is part of the online publication Labour market in the light of the COVID 19 pandemic - quarterly statistics alongside namely with the articles Employment, Absences from work and Hours of work.
Note: This article uses the seasonal adjusted data from the second quarter of 2020, i.e. April-June 2020, which is compared in some sections to the last quarter of 2019.
Labour market slack in the EU-27
The labour market slack refers to the total sum of all unmet demands for employment and includes four groups: (1) the unemployed people according to the ILO definition, (2) the underemployed part-time workers (i.e. part-time workers who wish to work more), (3) people who are available to work but not searching for it and, (4) people who are searching for work but are not available for it. While the first two groups are in the labour force, the last two, also referred to as the potential additional labour force, are both outside the labour force. For this reason, the “extended labour force”, composed of both the labour force and the potential additional labour force, is used in this analysis.
The labour market slack is expressed as percentage of this extended labour force, and the relative size of each component (each of the four groups) of the labour market slack can be compared by using the extended labour force as denominator.
At EU level, people aged between 15 and 74 years old with an unmet need for employment accounted, during the second quarter of 2020, for 14.6 % of the extended labour force as shown in Figure 1. The slack was more pronounced for women, who stood at 16.9 % of the extended labour force, than for men (12.5 %).
Highest shares of people with unmet demand for employment in Spain, Greece and Italy, where it exceeds 20 % of the extended labour force
Among EU Member States, Spain (25.8 %), Greece (24.7 %) and Italy (23.3 %) recorded the highest slacks, reaching around one fourth of the extended labour force (see Figure 2). Those countries also recorded the biggest gender gaps observed in the slack: 28.9 % for women against 18.8 % for men in Italy, 30.3 % against 20.3 % in Greece and 30.7 % against 21.4 % in Spain. The labour market slack of women exceeded the men's slack in all EU Member States except in Latvia, Lithuania and Romania (in these three countries the gender gap in the slack is less than 2 percentage points (p.p.)). The lowest labour market slacks in the EU-27 were observed in Malta, Poland and Czechia with less than 7 % of the extended labour force facing an unmet demand for employment (the slack corresponds to 6.9 %, 6.3 % and 3.5 % of the extended labour force respectively).
Evolution over time of the labour market slack
Increase in the labour market slack in all EU Member States, except in France where it is stable, with the biggest increases in Austria, Spain, Ireland and Estonia
The development of the labour market slack from the last quarter of 2019 to the second quarter of 2020 shows some consequences of the COVID-19 crisis on the labour market. The labour market slack in the European Union increased by 1.7 p.p. between the last quarter of 2019 and the second quarter of 2020, from 12.9 % to 14.6 %. Since the first quarter of 2013, the slack increased for the first time between 2019Q4 and 2020Q1, by +0.4 p.p.; it registered a consecutive increase between 2020Q1 and 2020Q2 of +1.3 p.p. (see the dynamic tool at the top of the article).
The labour market slack also increased between the last quarter of 2019 and the second quarter of 2020 in all EU countries, except France where it remained stable. Austria, Spain, Ireland and Estonia recorded the largest increases among Member States (see Figure 2). In Austria, the labour market slack rose from 10.4 % to 13.9 % of the extended labour force (+3.5 p.p.), in Spain from 22.6 % to 25.8 % (+3.2 p.p), in Ireland from 13.6 % to 16.7 % (+3.1 p.p) and in Estonia from 9.1 % to 12.2 % (+3.1 p.p). Over the same period, Malta, Czechia, Belgium and Poland reported increases lower than 0.5 p.p. in the share of people addressing a potential demand of employment (+0.4 p.p. for Malta and Czechia, +0.3 p.p. for Belgium and +0.2 p.p. for Poland). France reported in the second quarter 2020 the same share than in the last quarter 2019, which was 15.9 %.
Biggest gender differences in the evolution of the slack in Ireland, Romania, Denmark
At EU level, women registered between the last quarter of 2019 and the second quarter of 2020 a slightly sharper increase of the slack than men (+1.7 p.p. for women and +1.5 p.p. for men) (see Figure 2).
The biggest gender-based difference in the Member States was observed in Ireland: the labour market slack went up from 15.1 % to 19.2 % (+4.1 p.p.) for women and increased from 12.3 % to 14.4 % for men (+2.1 p.p.). The same findings in a lesser extent can be found in Romania (+2.4 p.p. for women and +1.3 p.p. for men) and in Denmark (+1.7 p.p. for women and +0.6 p.p. for men).
In contrast, Spain and Malta registered more substantial evolutions for men than for women: the slack rose in Malta from 5.4 % to 6.2 % for men (+0.8p.p.) and decreased from 8.1 % to 7.8 % for women (-0.3 p.p.). In Spain, it increased from 17.6 % to 21.4 % for men (+3.8 p.p.) and from 28.0 % to 30.7 % (+2.7 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 3). Moreover, the highest shares of labour market slack among young people in the second quarter of 2020 were observed in Spain (56.3 %), Italy (51.3 %) and Greece (50.5 %), where more than half of the young people of the extended labour force was recorded in the slack. In contrast, the slack concerned less than 20 % of the young people in the extended labour force in Germany (18.0 %), Poland (17.4 %), Malta (15.4 %), Czechia (9.9 %). The two age categories 25-54 and 55-74 correspond to similar share of slack in the extended labour force and show smaller differences across countries.
The development over time of the slack for young people is more pronounced than for older people (see Figure 4). From the last quarter of 2019 to the second quarter of 2020, the slack increased at EU level for all three age categories but to a different extent: from 27.0 % to 31.8 % (+4.8 p.p.) for people aged 15-24, from 11.8 % to 13.2 % (+1.4 p.p.) for people aged 25-54 and from 10.7 % to 11.6 % (+0.9 p.p.) for people aged 55-74.
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 part-time workers, people available to work but not seeking it and those seeking work but not immediately available) more or less substantial depending on the country or the period.
In the second quarter of 2020, in the EU-27, less than half of the slack (43.3 %) 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 second quarter of 2020 at its highest level since 2008, reaching 37.1 % of the total labour market slack. Finally, the underemployed part-time workers accounted for 19.6 % of the total slack, this share decreasing very slightly along the last quarters.
In the second quarter of 2020, the structure of the labour market slack was considerably different across countries (see Figure 6). In Ireland, Italy, the Netherlands, Germany, Austria, Finland, Portugal and Belgium, 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 % of the slack. In contrast, unemployment accounted for more than two thirds of the total labour market slack in Lithuania and Slovakia.
Specific consequences of the COVID-19 crisis on the labour market categories
In normal times, it is more or less expected that an economic slowdown leads to a decrease in the employment in parallel with an increase in the unemployment. However, the COVID-19 crisis and the consecutive exceptional measures like the lock-down or the closure of businesses may imply other category changes than those usually observed in case of economic winding down. Indeed, some people might have moved out from the labour force because of the lack of search for work or the impossibility to take a new professional opportunity due to the drop or the halt in the economic activity. Meanwhile and in addition, people also might be no longer available because of taking care of the children as the schools closed, for example. These persons might therefore not fulfil the ILO requirement to be considered unemployed and be stuck outside the classic labour force, as they are neither employed or unemployed (if they are neither available nor actively seeking). However, they still might be represented in the labour market slack as well as in the extended labour force in case they remained available or still seek work. This assumption can be verified at EU level (see Figure 7) and at national level (see Figure 8 and Figure 9).
Taking the whole EU population as reference (see Figure 7), the share of employed people aged 15-74 (excluding underemployed part-time workers) decreased from 58.3 % to 56.9 % (-1.4 p.p.) between the last quarter of 2019 and the second quarter of 2020. Over the same period, the share of unemployed people remained stable (at 4.2 %), exactly in the same way as the share of underemployed part-time workers and persons seeking work but not immediately available, that stood at 1.9 % and 0.6 % resp. of the total population in both quarters. However, the decrease in employment was actually balanced out by an increase in the population share who reported that they were available but not seeking (+1.0 p.p.) and by an increase in the population share outside the extended labour force (i.e. who reported that they were neither employed, available to work nor seeking), which rose by 0.4 p.p.
Figure 8 provides for each country an overview of the population broken down by labour market categories in the second quarter of 2020. In addition, Figure 9 reports on the evolution of the share of each category between 2019Q4 and 2020Q2. This last figure shows that the share of employed people (excluding underemployed part-time workers) decreased in all EU countries, except Malta, while the other categories fluctuated quite differently across countries.
The finding observed at EU level that the decrease in employment (excluding underemployed part-time workers) is accompanied with a stable share of unemployed people in the total population can also be observed in some EU Member States like Greece, Ireland, Cyprus, Poland and Czechia, where the share of unemployed people did not vary more than 0.1 p.p., while the other categories, like people available but not seeking and people who were neither employed, available nor seeking, fluctuated to a different extent (see Figure 9).
However, the EU pattern whereby the unemployment is relatively steady is not observed in all EU Member States. It is clearly visible in Figure 9 that in some EU Member States, the decrease in the share of employed people is partly compensated by a raise in the unemployment category or goes hand in hand with a decrease in the share of unemployed people. As it is detailed under the next section dedicated to unemployment, the unemployment actually varied significantly in some countries between the last quarter of 2019 and the second quarter of 2020.
This is for example the case in Estonia where the decrease in employment (-3.3 p.p) is essentially outweighed by increases in the share of unemployed people (+2.0 p.p.) and the share of people outside the extended labour force (i.e. who was neither employed, available nor seeking) (+1.5 p.p.). The lower shares of employed people in Lithuania, Latvia, and Sweden (-1.6 p.p., -0.6 p.p. and -1.8 p.p. respectively) were also registered together with a higher share of unemployed people (+1.6 p.p., +1.4 p.p. and +1.0 p.p. respectively) but in this case, with a lower share of people outside the extended labour force (i.e. who are neither employed, available to work nor seeking) (-0.3 p.p., -0.4 p.p. and -0.4 p.p. respectively).
In contrast, Italy, Portugal or Belgium recorded a decrease in the share of employed people of -1.6 p.p., -2.2 p.p. and -0.4 p.p. respectively between 2019Q4 and 2020Q2 but, in the meanwhile, the share of unemployed people also went down by -1.1 p.p., -0.6 p.p. and -0.2 p.p. respectively. In parallel, these three countries registered a substantial increase in the share of people available to work but not seeking (+1.7 p.p., +1.9 p.p. and +0.6 p.p. resp.) and, in a lesser extent, an increase in the share of people outside the extended labour force, those who were neither employed, available nor seeking (+0.3 p.p., +1.2 p.p. and +0.2 p.p. resp.).
Another pattern was moreover observed in France (and in France Metropolitan): like in Italy, Portugal and Belgium, both shares of employed and unemployed people decreased in France (-1.0 p.p. and -0.6 p.p.) but the share of people who was neither employed, available nor seeking increased by +1.2 p.p. and, to a smaller degree, the category of people available to work but not seeking rose by +0.7 p.p.
Note: Underemployed part-time workers and persons seeking work but not available are also included in Figure 9 but not commented due to their lower weights in the total population.
Focus on unemployment
Unemployment (ILO) is one component of the labour market slack. In the EU-27, it stood at 6.3 % of the extended labour force in the second quarter of 2020, specifically reaching 6.4 % for women and 6.2 % for men (see Figure 10).
In Greece and Spain, more than one in ten persons in the extended labour force was unemployed in the second quarter of 2020 (16.2 % and 14.1 % respectively). Moreover, Greece and Spain are part of the countries for which the biggest gap between men and women was found. Female unemployment in Greece accounted for 19.0 % and male unemployment for 13.9 % (difference of 5.1 p.p.). In Spain, unemployment stood at 15.1 % for women against 13.3 % for men (difference of 1.8 p.p.). Nevertheless, in the second quarter of 2020, the share of unemployed men in the extended labour force exceeded by 2 p.p. or more the share of unemployed women in Lithuania and Latvia (respectively 2.3 p.p. in Lithuania and 2 p.p. in Latvia).
In contrast, four EU Member States registered an unemployment rate lower than 4 % of the extended labour force: Czechia (2.3 %), Poland (3.0 %), Germany (3.4 %) and the Netherlands (3.6 %). All these countries moreover recorded a gender gap smaller than 0.7 p.p.
Between the last quarter of 2019 and the second quarter of 2020, the unemployment rate was stable at EU level (see the dynamic tool choosing unemployment (ILO) and Figure 11). However, behind this stability for the whole European Union, the share of unemployed people fluctuated by more than 1 p.p. in nine countries. Estonia, Lithuania and Latvia, where the unemployment stood in the second quarter of 2020 at 6.7 %, 8.5 % and 7.9 % respectively, recorded the most substantial increases compared to the last quarter of 2019 (+2.7 p.p., +2.2 p.p. and +1.9 p.p.). In contrast, the share of unemployed people in the extended labour force decreased, from the last quarter of 2019 to the second quarter of 2020, in five countries: Italy (-1.7 p.p.), Portugal and France both -0.9 p.p., and France Metropolitan, (-0.8 p.p.), Belgium and Ireland (-0.2 p.p. for both countries).
It might be useful to remind in this specific section on unemployment that in order to be considered unemployed according to the ILO's criteria, a person should be without work during the reference week, available to start working within the next two weeks (or has already found a job to start within the next three months) and be actively having sought employment at some time during the last four weeks. The lock-down and the temporary shutdown of some business activities and public sectors experienced by some countries might explain as previously mentioned in the article the lower number of people fulfilling the criteria of job search or even availability.
Focus on the potential additional labour force
The share of the potential additional labour force in the extended labour force increased in all EU Member States, except Latvia where it slightly decreased
As already mentioned, the potential additional labour force consists of two subgroups. One of the groups includes people who are available to work but do not seek it. At EU level, in the second quarter of 2020, this category accounted for 8.2 % of the population outside the labour force (i.e. the not the extended labour force) (see Figure 12). The other group is related to persons who seek work but are not immediately available to start working; this last group stood at 1.5 % of the population outside the (not extended) labour force. In total, 9.7 % 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 and Cyprus, follow the same main pattern clearly visible in Figure 12: people available to work but not seeking outnumber those seeking work but not immediately available.
The size of the potential additional labour force in proportion of the extended labour force is displayed in Figure 13. In Italy, in the second quarter of 2020, 12.9 % of people in the extended labour force were people available to work but not seeking or seeking but not immediately available. Italy was followed by Ireland, Finland and Spain that also recorded percentages higher than 7 % (precisely, 8.4 %, 7.5 % and 7.4 %). In contrast, in Czechia, Slovenia and Lithuania, less than two percent of the extended labour force consisted of people who were available to work and not seeking and people who were seeking but not immediately available.
Note: Due to low data reliability related to the category "people who are seeking but not immediately available", only persons available to work but not seeking are included in Figure 13 and 14 for Estonia, Malta and Romania. This is the reason for which they are not mentioned in the text.
Gender differences can be found at EU level, the female potential additional labour force as % of the female extended labour force standing at 6.4 % and the male potential additional labour force as % of the male extended labour force at 4.5 %.
In eight out of the 24 EU Member States for which data is available for both categories of the potential additional labour force, in the second quarter of 2020, there were comparatively more people who were available to work but not seeking or seeking but not available (i.e. the potential additional labour force) than unemployed people in the extended labour force. This was easily noticeable in Italy (difference of 6.0 p.p between both indicators) and Ireland (4.0 p.p.). A difference lower than 1 p.p. has been nevertheless reported by Portugal and the Netherlands (0.7 p.p.), Finland and Austria (0.4 p.p.), Croatia (0.2 p.p.) and Germany (0.1 p.p.).
Figure 14 shows that the potential additional labour force is the component of the labour market slack for which the change between both quarters is the most obvious and common across the EU countries. Indeed, the share of people seeking and not available together with those available but not seeking increased as percentage of the total population in all EU Member States, except Latvia where it slightly decreased by -0.3 p.p. Between the last quarter of 2019 and the second quarter of 2020, the sharpest change for this category was observed in Ireland (+3.7 p.p.), followed by Spain (+3.4 p.p.), Italy and Portugal (+2.8 p.p.) and Austria (+2.2 p.p.).
Focus on underemployed part-time workers
Highest shares of underemployed part-time workers in Cyprus, Greece, Spain, France, the Netherlands and Ireland, very low shares in Czechia and Bulgaria
Inside the extended labour force, the highest shares of part-time workers wanting to work more were found in the second quarter of 2020 in Cyprus, Greece, Spain, France (both France and France Metropolitan), in the Netherlands and Ireland (see Figure 15). In all these countries, 4 % or more of the extended labour force were underemployed part-time workers. More precisely, 4.7 % in Cyprus, 4.5 % in Greece, 4.2 % in Spain and in France but 4.1 % in France Metropolitan like in the Netherlands, and 4.0 % in Ireland of people in the extended labour force had part-time jobs and wanted to work more hours. In contrast, less than 0.7 % of the extended labour force in Czechia and Bulgaria were underemployed part-time workers (0.3 % and 0.6 % respectively) making them a relatively small group within the extended labour force (see Figure 15).
At EU level, 2.9 % of the extended labour force were underemployed part-time workers. This share reached 4.1 % for the female population and stood at 1.8 % for the male population.
Compared to the last quarter of 2019 (see Figure 16), the share of underemployed part-time workers remained relatively stable as percentage of the extended labour force (+0.1 p.p. at EU level). Only two countries recorded an increase exceeding + 0.5 p.p. between both quarters, and only two countries recorded a decrease exceeding -0.5 p.p. The two countries corresponding to such an increase are Italy, where the share of underemployed part-time workers increased by +1.1 p.p. accounting for 3.5 % of the total extended labour force, and the Netherlands, where the share rose by +0.8 p.p. reaching 4.1 % in the second quarter of 2020. In contrast, Malta and Spain reported lower shares of underemployed part-time workers in 2020Q2 compared with 2019Q4, which decreased by respectively -1.1 p.p. and -0.9 p.p.
Source data for tables and graphs
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.
Country note: Due to technical issues with the introduction of the new German system of integrated household surveys, including the Labour Force Survey (LFS), the figures for Germany for the first and second quarter 2020 are not direct estimates from LFS microdata, but based on a larger sample including additional data from other integrated household surveys. A restricted set of indicators has been estimated and used for the production of the LFS Main Indicators. These estimates have also been used in the calculation of EU and EA aggregates, and are published for some selected indicators (estimates for Germany are flagged as p – provisional, and u – unreliable). For more information, see here.
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.
The COVID-19 pandemic 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 lock-down 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 of 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.
Direct access to
- New measures of labour market attachment - Statistics in focus 57/2011
- European Union Labour force survey - selection of articles (Statistics Explained)
- 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)
- Unemployment - LFS adjusted series (une)
- 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)
- Total unemployment - LFS series (lfsa_unemp)
- 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)
- Total unemployment - LFS series (lfsq_unemp)