EU labour markets in time of economic crisis Change... · 1-Mar-10 Directorate-General for Employment, Social Affairs and Equal Opportunities─Unit D1 1 European Commission EU labour

European Commission1-Mar-10 Directorate-General for Employment, Social Affairs and Equal Opportunities ─ Unit D1 1

EU labour markets in time of economic crisis

Main Topics

• Economic setting

• LM reaction to crisis

• Impact on population groups

• Outlook

European Commission1-Mar-10 Directorate-General for Employment, Social Affairs and Equal Opportunities ─ Unit D1

Economic activity

EU in recession by 3rd qrtr 2008…• Sharp falls in output following 2 qrtrs (1.9% & 2.4%), signs of easing (↓0.3% 2nd qrtr 2009)

Vs year earlier, at low:• EU GDP ↓ 5% (strong falls in DE, IT & UK), US (3.8%), JP (8.6%)

…but return to growth in 3rd qrtr 2009 (EU: 0.3%)

Chart 23: GDP growth for the EU, US, JP, and larger EU Member States

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EU27 US JP DE ES FR IT PL UK

Source: Eurostat, national accounts. Data seasonally adjusted.

% c

hang

e

On previous quarter

On previous year


Employment has contracted

EU empl growth negative from 3rd

quarter 2008 on

By 2009q3:

• EU empl ↓ 4.7 mln(2%) on year

• Strongest declines• IE (~9%), Baltic

States (7─16%), ES (7%)

• In several MS emplresistant to crisis

Chart: Percentage change in employment across EU Member States, 2008q3-2009q3

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0

2

LV EE IE LT ES

DK

HU

BG SK FI SI

PT

SE CZ

EU

27 CY

MT

UK NL

FR IT AT

BE EL

DE LU PL

Source: Eurostat, national accounts. Data non-seasonally adjusted for change over year. Note: Data not available for RO.

% c

hang

e ov

er y

ear


Employment response to falls in economic activity

Varied employment reaction across MS

• strong in some MS (e.g. IE, PT, ES)

• subdued in others (esp BE, IT and above all DE)

Reasons

• strong contraction in construction sector(IE & ES)

• share workers in temp contracts (ES)

• internal flexibility in some (e.g. BE & DE)

Chart: Elasticity of employment declines to GDP contraction, 2008q3-2009q3

0.0

0.5

1.0

1.5

2.0

2.5

ES PT IE DK

LV MT

CY SK FR EE BG HU EL LT SE

EU27 CZ

AT SI NL FI UK BE IT DE

Source: Eurostat, national accounts. Note: No employment contraction in LU and PL. 2009q3 employment data not avaialble for RO.

% c

hang

e in

em

ploy

men

t / %

cha

nge

in G

DP

200

8q3-

2009

q3


Unemployment

UR rise limited vs strength of recession

Sharper economic downturn in EU vsUS, but:

• EU: UR ↑ 2.2 ppsover year

• US: ↑ 3.6 pps

…Reflects increased use other adjustment measures

Chart: Unemployment rate versus GDP growth for the EU and US

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Source: Eurostat, national accounts and series on unemployment. Data seasonally adjusted

% c

hang

e on

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viou

s ye

ar

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9

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% o

f lab

our f

orce

GDP growth EU lhs) GDP growth US lhs)

Unemployment Rate EU (rhs) Unemployment Rate US (rhs)


Sectoral DevelopmentsJob loss strongest in construction and manufacturing

Over year to 3rd qrtr:

• construction ↓1.4 mln

• manufacturing ↓ 2.4 mln

(2/3 of all declines)

• trade, transport & comms ↓ 1.1 mln

• financial & business activities ↓ 700K

• other services ↑ 1.1 mln (mainly public sector)

Low skilled manual & elementary occupations hardest hit (↓ 3–7%)

Chart: Sectoral employment changes for the EU, 2008q3-2009q3

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2

Agriculture Manufacturing Construction Wholesale andretail trade, hotelsand restaurants;

transport andcommunication

Financial servicesand business

activities

Publicadministration and

other services

Source: Eurostat, national accounts. Data non-seasonally adjusted

mill

ion

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hang

e

Change in levels (lhs)% change (rhs)


Adjustment by type of employment

• Faster and sharper adjustment of temporary employment– temporary: drop ~ 6% in 2009 on a year– permanent: only ~1% fall

• Increase of part-time employment versus fall in full-time employment– full-time: drop by ~3% by 2009q3 on a year– part-time: slowdown, but still growth

Chart Employment growth by type of employment in the EU27

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820

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% c

hang

e on

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Employees in permanent contracts Employed full-time

Employees in temporary contracts Employed part-time

Source : Eurostat, national accounts and EU LFS. Data for GDP seasonally adjusted, data for employment non-seasonally adjusted.

Growth of employees with permanent and temporary contracts

Growth of full-time and part-time employment


Working hours reduction

Decline of weekly working hours of full-time employees: EU down by 0.7 hours a week on a year

Reduction across most sectors: largest in manufacturing (1.3 hrs) and construction (0.8 hrs)

Decline in most Member States: largest in DE,1.4hrs

European Commission

Other adjustment measures

Other adjustment measures kept empl losses down

• short-time workingarrangements (~1.5 million workers in DE)

• partial unemplbenefits (e.g. BE)

• Wage concessions

Chart : Recipients of short-time working allowance, Germany 1998 - June 2009

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

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1,600,000

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08Fe

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ay-0

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Annual average stock (1998-2008) Monthly stock (Jan-08 - Jun-08)

Source: Eurostat, LMP database; BA


Variation in UR rises across Member States

Strong variation in UR rises…

… precipitous in certain MS

• ~ doubled in IE, ES & EE, LT

• tripled LV

highest URs(ES, LV ~ 20%)

.. marginal in others

• ~1 pp or less in some MS (e.g. BE, DE, LU & NL)

Chart: Unemployment rates for EU Member States 2008q3-Dec 2009

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5

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25

LV ES

EE LT SK IE HU PT

FR EL

EU

27 PL

SE FI IT BE CZ

BG UK

DE

DK

MT

RO S

ILU C

Y AT

NL

Source: Eurostat, Series on unemployment. Data seasonally adjusted. Note: * UK: change to October 2009. ** EE, EL, LT and RO: change to 2009 q3.

% o

f lab

our f

orce

December 20092008q3


Impact across population subgroups

Certain groups’employment more affected

• Men (↓ 3.1% vs1.2% for women)

• Youth (↓ 8.6%)

• Low-skilled (↓ 6%, ↓ 3% for medium-skilled,↑2.3% high-skilled)

• Migrants (non-EU nationals ↓ 5%, vs 2.2% for nationals)

Chart: Relative change in employment in the EU by sex, age, skill level and nationality, 2008q3-2009q3

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Men

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Med

ium

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h

Nat

iona

ls

Oth

er E

Una

tiona

ls

Non

-EU

natio

nals

Total Sex Age Skill level Nationality

Source: Eurostat, EU Labour force survey. Data non-seasonally adjusted

% c

hang

e ov

er y

ear t

o 20

09q3

European Commission

Unemployment rate developments in the EU

Strong UR rises for:

Youth non-EU nationals- up 5 pps over year to 3rd qrtr 2009 - up 5 pps (gap vs natls >10 pps)

(vs 2 pps or less other groups)

...by nationality group, 2007-2009

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Source: Eurostat, EU labour force survey

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f gro

up la

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other EU nationals non-EU nationalsnationals total

….. by age group, 2007-2009

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Source: Eurostat, EU labour force survey

% o

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15-24 Total 25-49 55-64


Outlook

• Deterioration in EU LM moderating– UR rising more slowly since Aug ( 9.6% in Dec)

• but still strong for young people ( 21.4% in Dec)

• LM outlook remains unfavourable– UR expected to deteriorate further risk of strong rise in LTU

• Commission's autumn economic forecast

– EU empl: -1.2 % in 2010

– EU UR: up to 10.3% for 2010

– recovery likely to be modest (& job creation subdued)


Conclusions

1. Most severe recession since WWII, clearly impacted on LMs

2. Effect on LM less than feared, in part due to adjustment through flexible working arrangements and nominal wage concessions

3. Unemployment has grown strongly – but severity of the increase varies widely across countries

4. Crisis has affected some groups more than others (youth, low-skilled, migrants, men, mainly those on temp contracts)

5. LM deterioration moderating, but further employment losses expected, while job creation for the EU as a whole likely to be subdued in the recovery


Thank you for your attention

European Commission


Economic setting

Output has fallen sharply since mid-2008

EU in recession by 3rd

qrtr 2008…

• Sharp falls in output following 2 qrtrs(1.9% & 2.4%)

• signs of easing (↓0.3% 2nd qrtr 2009)

Vs year earlier, at low:

• EU GDP ↓ 5% (strong falls in DE, IT & UK)

• US (3.8%), JP (8.6%)

…but return to growth in 3rd qrtr 2009 (EU: 0.3%)

Chart 23: GDP growth for the EU, US, JP, and larger EU Member States

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EU27 US JP DE ES FR IT PL UK

Source: Eurostat, national accounts. Data seasonally adjusted.

% c

hang

e

On previous quarter

On previous year

European C

omm

ission

Employm

ent change by occupation group

Chart: R

elative change in employm

ent in the EU by occupation group,

2008q3-2009q3

-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2Legislators,

senior officialsand managers

Professionals

Technicians andassociate

professionals

Clerks

Service workersand shop andmarket sales

workers

Skilledagricultural andfishery workers

Craft and relatedtrades workers

Plant andmachine

operators andassemblers

Elementaryoccupations

Source: Eurostat, EU

labour force survey

% change

European Commission

ER developments by sex and age group

Chart: ER developments in the EU by sex and age group, 2006-2009

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Source: EU labour force survey

perc

enta

ge p

oint

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nge

on p

revi

ous

year

Men 15_24

Men 25_54

Men 55_64

Women 15_24

Women 25_54

Women 55_64


Other adjustment measures

Wage concession

• growth in nominal compensation per employee falling, ↓sharply 1st qrtr

Chart: Growth in nominal compensation per employee and its wages component for the EU

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Source: Eurostat, national accounts and DG EMPL calculations. Data non-seasonally adjusted.

% c

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Compensation per employee

Wages and salaries

European Commission


Impact on productivity…

LM adjusted mainly through lower productivity

labour hoarding

• AT, BE, DE, IT & NL, adjustment via fall in productivity, hardly any via empl

Chart 15: Percentage changes in GDP, employment and labour productivity in EU Member States, 2008q2-2009q2

Percentage changes in GDP, employment and labour productivity between 2008q2 and 2009q2

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EU BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT SI SK FI SE UK

Source: Eurostat, national accounts. Note: all data non-seasonally adjusted. LU based on changes 2008q1 to 2009q1.

GDP Employment Apparent labour productivity

Source: Eurostat, national accounts. Note: all data non-seasonally adjusted. LU based on changes 2008q1─2009q1


…and unit labour costs

Sharp rise in unit labour costs

• EU: growth in RULC ↑sharply (DE, FR & UK)

• risk of unwinding of labour hoarding

Chart 17: Developments in year-on-year growth in real unit labour costs in the EU and five largest Member States over 2008 and 2009

Developments in year-on-year growth in real unit labour costs in the EU and five largest Member States over 2008 and 2009

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Source: Eurostat, national accounts

% g

row

th o

n sa

me

quar

ter o

f pre

viou

s ye

ar

EU DE ES FR IT UK

Source: Eurostat, national accounts


Measures taken by MS to combat LM effects of crisis

COMM database (incljoint COMM/OECD questionnaire, ~300 measures)

Prelim. assessment:

• Significant emphasis on empl (~ half of allmeasures)

Main measures incl:

• improving admin capacity of PES/ training opportunities

• reinforcing ALMPs

• temp reduced social security contributions

• support to flexible working time

Chart: Overview of discretionary labour market and social protection measures in Member States' recovery efforts

0 5 10 15 20 25

Encouraging f lexible w orking-time

Improving job placement and investing in re-training

Maintaining/reinforcing social protection

Reinforcing activation

Supporting employment by cutting labour costs

Revising EPL in line w ith f lexicurity

Enhancing education and lifelong learning

Supporting household purchasing pow er

Mitigating the impact of f inancial crisis on individuals

Others

Source: Commission Services

No. of countries taking given measure


Fiscal support to the recovery measures

Significant fiscal support to recovery programmes

• EU: 1.8% GDP

• Wide variation across MS

Measures to support LM and household purchasing power:

• AT, DE, FI, SW and UK largest stimulus (2% or more of GDP)

• LM measures only small share of total

• several MS very few LM measures

Chart 22: Overview of level of funding of measures in EU Member States' recovery plans

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AT SE PL UK

CZ SI BE CY NL

DK IE PT IT MT

SK FR LV EE EL RO

BG LT HU

% o

f GD

P

Measures aimed at households Increased spending on labour market

Measures aimed at business Increased investment expenditure

Source: Commission Services Note: No total for LU, and data for HU, LT and RO incomplete.


EU initiatives to mitigate crisis

European Economic Recovery Plan (EERP)Communication “Driving European Recovery”Employment Summit on 7th MayCommunication “A shared commitment for employment”Mobilising EU founding

– €200 billion recovery package– changes in European Social Fund and in European Globalisation

Adjustment Fund– new micro-finance facility

Promoting employment continues– EURES– New skills for new jobs initiative– European Employment Strategy as part of Strategy for Growth and

Jobs– Monthly monitoring reports

Documents

EU labour markets in time of economic crisis Change... · 1-Mar-10 Directorate-General for Employment, Social Affairs and Equal Opportunities─Unit D1 1 European Commission EU labour