New phenomena in the EU labour market

Press conference by László Andor, Member of the European Commission, on the implementation of a network of public employment services to boost job creation. (EC Audiovisual Services, 17/06/2013).

Everybody feels that the economic crisis haunting Eurozone increases the divergence between its northern and southern segments. It’s Eurostat however, the EU statistical service, that gave solid proof to this general feeling. Eurostat writer Martin Teichgraber undertook the task to analyse the impact that this crisis has on the labour market, in a paper entitled “European Union Labour force survey – annual results 2012”.

Increasing divergence

The main conclusions of this work are the following, “In 2012, the EU labour market was still being determined by the economic crisis. Key figures for the EU did not improve: they either continued to show negative trends (unemployment) or remained relatively stable in relation to the year before (employment). In addition, developments in the labour market did not affect Member States in the same way or to the same extent. As a result, the differences between Member States increased. The 2012 EU employment rate for persons of working age (15-64) dropped slightly to 64.2 % (- 0.1 percentage points -pps- compared with 2011). For men, it fell to 69.8 % (-0.3 pps), while for women it rose marginally to 58.6 % (+0.1 pps)”.

Predictably the most striking finding is that unemployment is increasingly dividing the European Union and the Eurozone labour market in two well-defined parts. The upper segment is located in the north-west and the other one in the south-east. It is as if an invisible line splits the EU in two parts, going from north-east to South-west. The Eurostat survey stresses that “Unemployment rose in the EU by 2 million persons in 2012 to 25.1 million… In 2012, the rate ranged from 4.3 % in Austria, 5.1 % in Luxembourg, 5.3 % in the Netherlands and 5.5 % in Germany to 25.0 % in Spain, followed by Greece (24.3 %) and Portugal (15.9 %)”.

Mobility

Contrary to European Commission’s allegations that Eurozone’s labour force is not enough agile the report reveals that “Around one million employed persons took up residence in an EU Member State other than their country of citizenship…around 630 000 persons were EU nationals from another Member State and some 415 000 were non-EU nationals”. Understandably the employment rate for foreign citizens with an EU citizenship is significantly higher (67.7 %) than that for non-EU citizens (53.7 %). It’s much easier for an EU national to find employment in another EU country than for a worker coming outside the Union.

Obviously the labour market trends in employment of foreigners differ widely between member states. Naturally in EU Member States which have a low unemployment rate recorded an increase in recently employed non-national persons in their country, while those with a comparatively high unemployment rate recorded a decrease. The inflow nearly doubled in Austria (96.2 %) and in Germany (89.2 %). By contrast, it declined in Spain (-54.0 %) and Italy (-14.9 %) compared with 2010.

Part-time grows

Last but not least an infallible sign that the economic crisis has been deeply distorting the EU labour market is the continuous increase of part-time employment. According to Eurostat “Part-time employment continued its upward trend in 2012. Its share of total EU employment reached 19.2 %, up 0.4 pps on 2011”. The problem is however that this trend does not follow the general north-south pattern in EU’s labour market. Among the EU countries, part-time employment was highest in the Netherlands (49.2 % of employed persons) and lowest in Bulgaria (2.2 %) and Slovakia (4.0 %).

There is a possibility that the part-time trend in the labour market is not directly related to the present crisis. It may constitute a longer term tendency in the labour relations constellation. Probably a relaxed attitude of the controlling authorities permits a smaller or larger violation of the part-time hours, thus allowing employers to cover their needs much cheaper. This tendency may be more acute in the services SMEs and facilitated by legislation like the ‘petty jobs’ arrangement in Germany. Whatever the causes this phenomenon will certainly progress and there are no signs of reversal. Time will show its real nature.