Employment, Social Affairs & Inclusion

News 09/10/2015

Employment & social situation: EU economy continues its moderate but consistent growth

Labour markets and social indicators in the EU continue to gradually improve, benefitting from the strengthening in economic activity, according to the latest edition of the Employment and Social Situation Quarterly Review.

Graph with increasing line and hand almost touching the line with thumb and index finger

All but one Member State (France) registered positive growth in the second quarter of 2015. Economic activity in the second quarter of 2015 was higher than a year ago in nearly all Member States. Only in Finland GDP remained unchanged.

Labour markets in the EU continue to gradually improve, benefitting from the strengthening in economic activity. In the second quarter of 2015, employment levels increased by 0.2% in the EU and by 0.3% in the EA. Over the year to the second quarter of 2015, employment growth was 1% in the EU and 0.9 % in the EA i.e. about 2.3 million and 1.3 million people respectively. Since the first quarter of 2013, employment has risen by 2% in the EU and by 1.4% in the EA (respectively about 4.5 million and 2 million more employed people).

Service sectors contributed the most to the recent employment growth in the EU. Employment increased in most service sectors in the second quarter of 2015, while it stagnated in agriculture and industry and declined in construction. Compared to the first quarter of 2014, employment was up in all sectors except agriculture.

Permanent and full-time jobs continue to lead employment expansion since the beginning of 2014. In the year to the first quarter of 2015, the number of employees with a permanent contract grew by 1.9 million, while the number of employees with a temporary contract grew by 815 900. In the same period, the number of full-time workers rose by 1.7 million while the number of part-time workers grew by 535 000.

Unemployment fell or remained stable in most Member States

Large differences remain across Member States. Between August 2014 and August 2015 unemployment rates declined for most Member States but increased in four, namely Finland 0.9 pp, and to a lesser extent France 0.4 pp, Belgium 0.2 pp and Austria 0.1 pp. Large differences remain among Member States, with the unemployment rate ranging from 4.5% in Germany to a high of 22.2% in Spain and (25.2%, June 2015) Greece.

The long-term unemployment rate shows some signs of decline but remains high. The long-term unemployment rate saw a yearly moderate decline in the first quarter of 2015 (0.4 pp). Though modest, the decline was higher than those of previous quarters. Nevertheless, in the first quarter of 2015, those unemployed for more than a year continue to represent almost 5% of the EU labour force and nearly 12 million people. During this period the very-long term unemployment rate (for those unemployed for more than two years) showed its first year-on-year decrease 0.1pp since 2008 and is now 3%.

Financial conditions of EU households continue to improve

Households are benefitting from a stronger economic activity and improved labour markets. Growth in real gross disposable household income (GDHI) in the EU accelerated further in the year to the first quarter of 2015. The continuous improvement resulted mainly from an increase in income from work, but also from an increase in property income, and was supported by a further increase in social benefits.

Fewer EU households need to draw on savings or run into debt to cover current expenditures than a year ago. Still, financial distress is well above the levels seen in the previous decade, currently affecting around 15% of the population. Low-income households have seen some ups and downs since the beginning of 2014 indicating that this group cannot reach a more permanent easing in the financial distress.

The outlook is positive

The economic outlook points to a continuation of economic and labour market recovery. Economic sentiment and employment expectations are a bit firmer, and unemployment expectations lower than a year ago. Positive medium-term outlook for growth for 2015-2016 has not changed much, with labour markets set to continue to progress moderately.

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