The FINANCIAL - European labour market slack up to 14% in Q2

European labour market slack up to 14% in Q2

European labour market slack up to 14% in Q2

The FINANCIAL -- Throughout the second quarter 2020, the labour market across the European Union (EU) was affected by COVID-19 measures taken by Member States. Employment and unemployment as defined by the International Labour Organisation (ILO) concept are, in this particular situation, not sufficient to describe all the developments taking place in the labour market. In this phase of the crisis, active measures to contain employment losses led to temporary absences from work rather than dismissals. In addition, individuals could not search for work or were not available due to the containment measures, thus not counting as unemployed according to the ILO concept.

In this release, Eurostat, the statistical office of the European Union, is publishing a set of additional seasonally adjusted quarterly indicators which help to capture the most recent movements on the labour market in the EU Member States. These include total labour market slack, which comprises all persons who have an unmet need for employment, absences from work as well as an index of total actual hours worked in the main job. More new indicators on recent job leavers and starters, weekly total absences, as well as transitions are available in the Eurostat database.

Labour market slack up by 1.2 percentage points, employment down by 1.0 percentage points

In the second quarter of 2020, 187.3 million persons in the EU were employed. The EU seasonally adjusted employment rate for people aged 20-64 stood at 72.0%, down by 1.0 pp from 73.0% in the first quarter 2020. This has been the sharpest quarter-on-quarter decline since the beginning of the time series in 2000. 13.1 million persons were unemployed. The EU seasonally adjusted unemployment rate was 6.5%, up from 6.3% in the first quarter 2020. At the same time, seasonally adjusted total labour market slack in the EU, consisting in unmet demand for labour, amounted to 29.6 million persons, which represented 14.0% of the extended labour force in the second quarter 2020, up from 12.8% in the first quarter 2020. This has been the highest quarter-on-quarter increase since the beginning of the time series in 2008.

Labour market slack increased most in Ireland, Italy and Austria

Overall labour market slack increased in all EU Member States in the second quarter 2020 compared to the first quarter 2020, except in Latvia (-0.6 pp). The highest increases were reported in Ireland (+3.4 pp), Italy and Austria (both +2.6 pp), and Spain (+2.4 pp). Employment fell in all countries with the exception of Luxembourg (+0.6 pp). The highest drops in employment were recorded in Estonia (-3.3 pp), Slovenia (-2.2 pp) and Spain (-2.1 pp), and the lowest in Croatia (-0.3 pp), Latvia and Poland (both -0.4 pp).

Number of employed persons temporarily absent from work up by over 80%

In the second quarter 2020, a total of 40.9 million persons were absent from work in the EU, an increase of 18.6 million compared to the first quarter 2020. This increase is almost exclusively due to a sharp increase in temporary lay-offs, which rose from 2.4 million persons to 19.3 million persons. The number of persons absent from work due to reasons not including lay-off, holiday or illness, rose from 4.9 million to 7.8 million between the two quarters.

In comparison to the first quarter 2020, all Member States for which data are available experienced a rise in overall absences from work in the second quarter 2020. The highest rates of absences were observed in Greece (39.6%), Cyprus (32.0%), Spain (27.9%) and France (27.7%) and the lowest rates in Bulgaria (10.9%), Latvia (12.0%) and Luxembourg (12.9%)

Sharp fall of hours worked in the second quarter 2020

Total actual hours worked have dropped sharply in the EU between the first quarter 2020 and the second quarter 2020, and have fallen substantially below the values observed during the debt crisis. The levels of total actual hours worked are influenced by the total number of persons working, as well as the number of hours worked by each of these persons. In the second quarter 2020, total actual hours worked have hit record lows for women as well as for men. Women have been hit harder than men, with a drop from 103 to 90 index points between the first quarter 2020 and the second quarter 2020, compared to a drop of 93 to 83 for men. 

All Member States for which data are available experienced a drop in total actual hours worked between the first quarter 2020 and the second quarter 2020. This was the second consecutive quarterly drop in total actual hours worked for all countries except Finland. The highest overall falls were observed in Spain (-25.9%), Portugal (-23.3%), Greece (-21.0%), Ireland (-20.7%) and Cyprus (-20.4%).

Author: The FINANCIAL