COMMISSION STAFF WORKING DOCUMENT on labour market trends and challenges
Date: 2012-04-18
Institutions: European Commission
Subjects: EU statistics, employment statistics, female unemployment, job creation, job mobility, long-term unemployment, national statistics, seasonal unemployment, youth unemployment

EUROPEAN COMMISSION 

Strasbourg, 18.4.2012  
SWD(2012) 90 final 

COMMISSION STAFF WORKING DOCUMENT 

on labour market trends and challenges 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT,THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a job-rich recovery 

{COM(2012) 173 final} 
{SWD(2012) 92 final} 
{SWD(2012) 93 final} 
{SWD(2012) 95 final} 
{SWD(2012) 96 final} 
{SWD(2012) 97 final} 
{SWD(2012) 98 final} 
{SWD(2012) 99 final} 
{SWD(2012) 100 final} 

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COMMISSION STAFF WORKING DOCUMENT 

on labour market trends and challenges 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT,THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards a job-rich recovery 

TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

Employment trends.................................................................................................... 4 

Evolution at EU level ................................................................................................... 4 

Evolution at Member State level.................................................................................. 5 

Evolution by age, gender and skill level ...................................................................... 7 

Permanent vs. temporary jobs ...................................................................................... 7 

1.5.  Wages and labour productivity .................................................................................... 8 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

3.1. 

3.2. 

Unemployment trends.............................................................................................. 10 

Evolution at EU level ................................................................................................. 10 

Evolution at Member State level................................................................................ 11 

By duration................................................................................................................. 11 

Evolution by age, gender and skill level .................................................................... 12 

Youth: unemployment and inactivity......................................................................... 12 

Job creation: sectoral aspects.................................................................................. 14 

Evolution by sector .................................................................................................... 14 

SMEs .......................................................................................................................... 16 

3.3.  White jobs .................................................................................................................. 16 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

Green jobs .................................................................................................................. 17 

Digital jobs ................................................................................................................. 19 

Skills and mobility.................................................................................................... 20 

Skills, mismatches, demography and mobility .......................................................... 20 

Vacancies and unemployment.................................................................................... 20 

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4.3. 

4.4. 

5. 

Intra-EU mobility ....................................................................................................... 21 

Employment of third-country nationals ..................................................................... 22 

Labour market challenges....................................................................................... 25 

Disclaimer:  This  document  is  a  European  Commission  staff  working  document  for 
information  purposes.  It  does  not  represent  an  official  position  of  the  Commission  on  this 
issue, nor does it anticipate such a position. 

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1. 

EMPLOYMENT TRENDS 

1.1. 

Evolution at EU level  

Chart 1: Employment in the EU, change on the previous quarter (000 persons) 

000's persons

1500

1000

500

0

-500

-1000

-1500

-2000

q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4

2005

2006

2007

2008

2009

2010

2011

Source: Eurostat, National accounts [namq_aux_pem], total employment - domestic concept, data are seasonally adjusted 
and adjusted data by working days 

Starting in the second quarter of 2010, EU employment grew by around 0.9 million jobs until 
the end of 2011 (see Chart 1). But this recovery amounted to less than a fifth of the jobs lost 
between mid-2008 and the first quarter of 2010 (down by about 6 million, from 228 to 222 
million).  The  slight  recovery  was  interrupted  in  the  third  and  fourth  quarter  of  2011,  with 
drops  by,  respectively,  430  000  and  120  000  jobs.  By  contrast,  the  US  labour  market  cycle 
had  a  larger  amplitude,  losing  7.5  million  jobs  between  early  2008  and  end-2009  and 
recuperating since then 2.5 million jobs, or a third of the previous loss.  

Chart 2: Employment growth in the EU and US 

% y-o-y

3

2

1

0

-1

-2

-3

-4

-5

EU

US

08Q1

08Q3

09Q1

09Q3

10Q1

10Q3

11Q1

11Q3

Source:  Own  calculations  based  on  Eurostat,  National  accounts  [namq_aux_pem],  total  employment  -  domestic  concept, 
data  are  seasonally  adjusted  and  adjusted  data  by  working  days  (EU)  and  Employment  level  –  non-agriculture,  wage  and 
salary workers (LNS12032187), seasonally adjusted (Federal Reserve Economic Data) 

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Employment fluctuations in the EU did only partly and with a lag follow the ups and downs 
of the economy. The drop in employment in 2009 (-1.8%) was moderate compared to the fall 
in GDP, but continued in 2010 (-0.5%), despite the recovery. This is partly explained by the 
widespread use of internal flexibility and short-time working arrangements adopted by some 
Member States – such as Austria, Belgium and Germany – which served to reduce working 
hours  rather  than  cut  jobs,  but  subsequently  tempered  the  impact  of  the  recovery  on 
employment. 

The effects of the crisis were reflected in a drop in the employment rate for the working-age 
group (15-64 years) in all but four Member States. Taking a longer-term perspective, despite 
the crisis, substantial progress has been made in EU labour markets since 2000. The number 
of  people  aged  15  or  over  in  employment  had  increased  by  19.7  million  between  2000  and 
2008. Even after the impact of the crisis, the 2010 figure was still 14.4 million higher than in 
2000. 

The  employment  rate  for  the  EU  working-age  population  in  mid-2011  stood  at  64.5%  (age 
group 15-64), resp. 68.9% (20-64), still more than 2 pps higher than in 2000. At EU level, in 
order to achieve the 75% headline target, 17.6 million jobs will have to be created by 2020 
within the 20–64 age group, meaning that employment will have to grow by 0.8% per annum 
on average between 2010 and 2020.  

1.2. 

Evolution at Member State level 

Chart 3: Member States' employment changes in 2011 q4 (yearly change, 000’s persons and 
quarterly change, %, q-o-q) 

600

500

400

300

200

100

0

-100

-200

-300

-400

-500

-600

000's persons

% 

Employment change since 2010q4
(000's persons) (lhs)

2011q4 % q-o-q (rhs)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

-1.5

-2.0

-2.5

-3.0

-3.5

L
E

T
P

O
R

S
E

E
E

T
M

I

Z S
C

L
N

T

I

E
B

Y
C

K
S

R
F

K
D

E
S

U
H

K
U

G
B

I

E F
D

T
A

E

I

U
L

L
P

T
L

V
L

Source: Own calculations based on Eurostat, National accounts [namq_aux_pem], total employment - data are seasonally 
adjusted and adjusted data by working days (except for RO and EL). 2011q3 for LU. 

Employment  gains  and  losses  have  been  uneven.  For  about  half  of  the  Member  States 
employment  rose  in  the  year  to  2011q4.  Germany  added  more  than  half  a  million  jobs  and 

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about  the  same  number  was  lost  in  Spain  (see  Chart  3).  Poland  and  France  also  recorded 
significant  rises  in  employment  (above  150  000)  over  the  last  four  quarters,  while 
employment was stable in Italy and the United Kingdom. A large number of jobs was added 
in Romania (130 000), Sweden (70 000) and Austria (50 000). 

Besides  Spain,  some  other  Member  States  experienced  marked  job  losses  over  the  same 
period. Employment dropped sharply in Greece and Portugal (respectively 400 000 and 150 
000 jobs lost). Falls were also recorded in Bulgaria, Ireland, Slovenia and Denmark. 

Regaining pre-crisis (2008q2) levels of employment appears to be more and more difficult in 
most Member States. Only eight Member States have more than offset job losses due to the 
crisis (Luxembourg, Malta, Poland, Belgium, Germany, Austria, Sweden and Cyprus).  

The apparent stability in the EU employment rate over the year to the third quarter of 2011 
hides again substantial contrasts among Member States. Taking a longer-term perspective on 
employment rates, Chart 4 shows the progress made by each Member State in the ten years to 
2010,  with  improvements  in  twenty-one  Member  States,  particularly  strong  in  Bulgaria, 
Germany, Cyprus and Poland, and relative improvements in most of the others. Conversely, 
the  employment  rates  in  Ireland,  Denmark,  Portugal,  Lithuania,  the  United  Kingdom  and 
Hungary fell1.  

Chart  4:  Employment  rate  developments  in  Member  States  between  2000  and  2010  (age 
group 15-64  

Percentage of 
population 
aged 15-64

80

75

70

65

60

55

50

NL DK SE AT DE CY UK FI SI PT LU CZ E
U-
27

FR BE EE IE BG EL LV PL RO SK ES LT IT MT HU

Increase

Reduction

Source: Eurostat LFS, employment rate (15 to 64 years), annual averages [lfsi_emp_a] 

1 

Please  note  that  the  comparison  is  affected  by  breaks  in  the  series  for  Germany,  Spain,  Italy,  The 
Netherlands, Austria, Romania and Sweden. 

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1.3. 

Evolution by age, gender and skill level 

The stability in the EU employment rate over the year to the third quarter of 2011 (at 64.6%) 
masks a decrease for younger workers (down by 0.5 pp), stabilisation for prime age workers 
and  an  increase  for  older  workers  (up  by  1.1  pps).  Compared  with  three  years  ago, 
employment for older workers is 1.7 pps higher, while it has fallen for younger and prime age 
workers (down by 3.9 pps and 1.9 pps respectively). 

Over the year to the third quarter of 2011, the employment rate for men fell slightly (by 0.2 pp 
to  70.5%)  and  the  rate  for  women  went  up  (by  0.2  pp  to  58.7%).  Overall,  proportionally 
worse hit by the economic downturn, the employment rate for men lost more ground than the 
rate for women. The rates are down by 2.8 pps for men and 0.5 pp for women, as compared 
with  three  years  earlier.  This  relative  stability  in  the  employment  rate  observed  for  women 
resulted from a decrease in inactivity which compensated for an increase in unemployment2.  

Over the year to the third quarter of 2011, the employment rates for all education levels fell 
slightly. The economic downturn has hit the lowest skilled (up to lower secondary education) 
hardest,  with  a  3.4  pps  drop  in  the  employment  rate  (to  45.4%),  compared  with  three  years 
earlier. The decreases for medium skilled (having upper secondary and post-secondary non-
tertiary education) and high skilled (first and second stage of tertiary education) were clearly 
smaller, at respectively 2.3 pps and 1.7 pps. 

1.4. 

Permanent vs. temporary jobs 

The number of permanent jobs was up by 680 000 (+0.4%) to 154 million in the year to the 
third  quarter  of  2011.  This  increase  remains  subdued  compared  to  pre-crisis  years,  when 
average  growth  for  permanent  jobs  (between  2006  and  2008)  was  four  times  higher.  At  the 
same time, temporary jobs were up by 220 000 (+0.9%) to 26 million, but self-employment 
fell by 1.8% (down by 630 000) to 33.8 million. The respective contributions of permanent 
jobs,  temporary  jobs  and  self-employment  were  +0.3  pp,  +0.1  pp  and  -0.3  pp,  yielding  an 
overall change in employment of 0.2% over the previous four quarters. 

The number of permanent jobs for older workers grew by 1.2 million (5.8%) over the year to 
the  third  quarter  of  2011,  a  trend  confirmed  in  each  quarter.  In  a  medium-term  perspective, 
the number of older workers in permanent jobs has considerably increased, with 2.1 million 
more than three years ago, reaching 21.2 million in the third quarter of 2011. 

There  was  a  slight  reduction  in  the  number  of  permanent  jobs  for  prime-age  workers,  at  -
0.1%,  close  to  stabilisation.  Currently,  122.4  million  people  of  prime  age  work  on  a 
permanent contract in the EU, 3.9 million, or 3% fewer than three years ago. The number of 
young  workers  on  permanent  contracts  fell  by  0.4  million  (-3.7%)  to  10.3  million  over  the 
year to the third quarter of 2011. 

The number of young workers on temporary contracts was still decreasing in the year to the 
third quarter of 2011, by 80 000 (-1.0%). The net loss (down by 0.8 million or -9%) for this 
age group is considerable when compared with three years earlier. The present trend remains 
slightly negative. 

2 

For a detailed analysis of the situation of men and women during the crisis, see also "The impact of the 
economic crisis on the situation of women and men and on gender equality policies", report from IRS 
and FGB, commissioned by DG JUST. 

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First to decline during the 2008 crisis, temporary jobs have reacted sooner and the trend has 
been  upward  for  the  last  six  quarters.  Among  temporary  workers,  young  people  are  over-
represented, with 32% of all temporary jobs. In fact, 44% of young workers are on temporary 
contracts. Young people have not benefited from the recovery in temporary work. For prime-
age  employees,  of  whom  only  12%  are  on  temporary  contracts,  temporary  jobs  still  remain 
the driver of recent employment growth, with an increase of 300 000 (up by 1.8%) over the 
year.  

Both the share of temporary jobs in total employment and their role in the labour market vary 
significantly across the EU. While in some Member States temporary contracts often serve as 
a stepping stone to more permanent employment and/or carry a relatively low wage penalty, 
in others temporary workers find themselves trapped in poor working conditions. Transition 
rates from temporary to permanent contracts range from less than 30% in FR, NL, PT to more 
than 50% in AT, BG, EE, HU, SI, SE, SK and UK3. A related aspect of temporary jobs is in-
work poverty; that is people who despite their jobs live under the at-risk-of poverty threshold. 
A low labour market attachment in terms of hours worked, or poor contractual conditions can 
lead  to  poverty.  In-work  poverty  is  much  more  prevalent  among  people  with  temporary 
contracts. 

1.5.  Wages and labour productivity 

In recent years we have seen business cycle effects in labour productivity due to the lagged 
response of employment growth to output growth. During the downturn (2008-2009), output 
decreased  faster  than  employment  and  productivity  fell.  During  the  upturn  (2010),  output 
increased faster than employment so that productivity rose. The strong productivity growth in 
most  Member  States  that  joined  the  EU  in  2004  reflects  to  a  large  extent  catching-up 
following the ongoing restructuring of the inefficient production structure inherited from the 
past, fuelled by large FDI which helped to renew outdated capital stock. In the EU as a whole 
labour productivity growth averaged a modest 1.3% per annum over the 2001-2007 period4. 
For 2008 and 2009 a negative growth of respectively -0.6% and -2.5% is recorded, followed 
by a positive strong growth of 2.5% in 2010. The available data for the first quarter of 2011 
seem to indicate that productivity growth was weakening. 

In the EU, the nominal unit labour cost increased over the whole period from 2001 until 2010, 
indicating  that  overall  nominal  compensation  per  employee  increased  more  than  labour 
productivity. At the level of the Member States there are some remarkable differences. Most 
new  Member  States  listed  strong  growth  in  the  unit  labour  cost  on  the  back  of  catching  up 
effects. In the euro area, Germany compounded by far the lowest growth in its unit labour cost 
over  the  2001-2010  period,  i.e.  4.4%5.  By  contrast,  Southern  Member  States  (Italy,  Spain, 
Portugal, Greece) and Ireland, Denmark and the United Kingdom all registered compounded 
increases  of  25%  or  more6.  An  annual  inflation  close  but  below  2%  would  yield  a 
compounded inflation rate of about 20% over the period 2001-2010. During that period, the 
euro area as a whole saw a compounded growth in its unit labour cost of 18.7% - mainly due 
to  the  modest  increase  in  Germany.  The  low  unit  labour  cost  growth  in  the  euro  area  as  a 

3 

4 

5 

6 

See  for  instance  Employment  and  Social  developments  in  Europe  2011,  chapter  4;  pp.  147-148  ( 
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=6176 ). 
Source:  Eurostat  variable:  Labour  productivity  -  annual  data  [nama_aux_lp];  real  labour  productivity 
per person employed; percentage change on previous period; and own calculation. 
Source:  Eurostat  variable:  Nominal  unit  labour  cost  [nama_aux_ulc],  percentage  change  on  previous 
period; and own calculation. 
Same variable and same calculation method as in previous footnote. 

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whole  contributed  to  a  monetary  policy  that  kept  euro-area  nominal  interest  rates  low.  This 
had an indirect impact on employment as it fuelled in some Member States the availability of 
credit  at  low  real  interest  rates  for  consumption  (Greece)  and  construction  (Spain,  Ireland) 
which  led  to  overheating  and  cyclical  expansion  of  employment  (as  well  as  other  socio-
economic imbalances). 

Chart 5: Changes in cost competitiveness and employment in EU15, 2001-2010 

Employment growth,
% change '01-'10

AT

BE

ES

IT

FR

UK

DE

SE

FI

NL

EL

IE

DK

PT

12

9

6

3

0

-3

-6

-15

-10

-5

0

5

10

15

20

25

Cost competiveness (Real Effective Exchange Rate based on unit labour costs), % change '01-'10

Source: AMECO7  

International  competitiveness  is  determined  by  the  margins  realized  by  domestic  producers 
relative to foreign producers, which in turn depend on unit production costs of domestically 
produced  goods  and  services  relative  to  the  unit  production  costs  of  goods  and  services 
produced  by  trading  partners,  and  on  the  relative  prices  for  these  products  derived  from 
quality, innovativeness, reputation, marketing and other factors.8 The previous section showed 
that  cost  push  pressures  induced  by  nominal  unit  labour  cost  growth  were  unevenly  spread 
across the Member States from 2001 until 2011 – contributing to notable divergence across 
the  Member  States'  real  effective  exchange  rate  (REER).  For  the  EU  as  a  whole,  the  real 
effective  exchange  rate  showed  an  upward  trend  over  the  period  from  2001  until  2008, 
indicating a steady deterioration of external competitiveness. At the onset of the financial and 
economic  crisis  the  REER  reversed  path  -  depreciating  by  about  10%  over  the  2008-2010 
period9. When the REER depreciates (appreciates), international competitiveness will increase 
(decrease),  having  the  potential  to  lead  to  higher  (lower)  net  exports  which  may  have  a 
positive (negative) effect on employment as output will increase (decrease).  

7 

8 

9 

Real effective exchange rate (AMECO variable XUNRQ): real effective exchange rates based on unit 
labour  costs  (total  economy),  relative  to  the  rest  of  35  industrial  countries,  double  export  weights; 
Employment, persons: total economy (National accounts) (AMECO variable NETN). 
Labour  is  not  the  input  whose  productivity  matters  in  this  context  –  total  factor productivity  depends 
also on efficient utilisation of natural resources and fixed and financial capital. 
Rate  calculated  from  AMECO  variable  XUNRQ:  real  effective  exchange  rates  based  on  unit  labour 
costs (total economy), relative to the rest of 35 industrial countries, double export weights. 

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Chart  5  shows  an  unexpected  apparent  positive  correlation  between  the  REER  and 
employment growth as exuberant credit growth in most Southern Member States and Ireland 
led to higher inflation (higher REER) and stronger, but ultimately unsustainable employment 
growth.  Unwinding  the  imbalances  accumulated  before  the  crisis  in  the  least  economically 
and  socially  damaging  way  requires  a  rebalancing  between  the  tradable  and  non-tradable 
sectors in the respective countries, facilitated by a combination of wage flexibility especially 
in  the  non-tradable  sector,  measures  supporting  an  expansion  of  the  tradable  sector  where 
relevant, and investment in professional and geographic mobility. 

2. 

UNEMPLOYMENT TRENDS  

2.1. 

Evolution at EU level 

With a new phase of steady increases since spring 2011, European unemployment has reached 
a historically high level cancelling out the previous moderate recovery. 

Between April 2008 and April 2010, the number of unemployed people in the EU surged by 
around 7 million, reaching 23.3 million, causing the EU unemployment rate to rise by 2.9 pps 
to 9.7%. A moderate recovery occurred in the subsequent months until March 2011, lowering 
the  number  of  unemployed  by  around  640  thousand  and  the  unemployment  rate  by  0.2  pp 
(9.5% in March 2011). Since then, the number of  jobless  has  increased  again  by  more  than 
one and a half million until February 2012, outweighing previous improvements.  

The  EU  unemployment  rate  still  stood  at  its  historic  high  of  10.2%  in  February  2012,  and 
10.8%  in  the  euro  area.  Nearly  two  thirds  of  the  Member  States  saw  unemployment  rising 
over  the  last  three  months,  driving  up  EU  unemployment  to  24.550  million.  A  different 
pattern has been seen in the US, where the unemployment rate has been oriented downward 
since the end of 2010, down by 0.7 pp over the last twelve months, to 8.3% in February 2012.  

Chart 6: Unemployment in the EU and US 

% of active population

11

10

9

8

7

6

5

4

EU

US

06:01

06:07

07:01

07:07

08:01

08:07

09:01

09:07

10:01

10:07

11:01

11:07

12:01

Source: Eurostat, unemployment rate, seasonally adjusted data (%) [une_rt_m] 

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2.2. 

Evolution at Member State level  

Divergences  among  Member  States  are  persistently  high.  Since  March  2011  there  are  signs 
that  the  downward  trend  has  clearly  been  reversed  in  the  majority  of  countries.  Only  six 
countries  were  still  benefiting  from  falling  unemployment  over  the  last  three  months  to 
February  2012:  Austria  (-0.2  pp  to  4.2%),  Romania  (-0.5  pp  to  7.1%),  Finland  (-0.2  pp  to 
7.4%), Latvia (-0.2 pp to 14.6% in December), Lithuania (-1.0 pp to 14.3% in December) and 
Ireland (-0.1 pp to 14.7%). 

Over the three months to February 2012, the number of unemployed increased in almost all 
Member States. The largest increases were seen in Spain (+166 000; unemployment rate: +0.7 
pp  to  23.6%),  Italy  (+134  000;  +0.5  pp  to  9.3%),  Greece  (+129  000;  +2.5  pps  to  21.0%  in 
December 2011), France (+66 000; +0.2 pp to 10.0%), Portugal (+49 000; +1.0 pp to 15.0%), 
as well as in Poland (+41 000; +0.2 pp to 10.2%). The largest decrease in unemployment over 
the last three months was seen in Romania (-44 000; -0.5 pp to 7.1%).  

2.3. 

By duration 

The severe rise in unemployment over the period 2008-2009 has continued to feed into long-
term  unemployment.  Whilst  there  has  been  relatively  little  inflow  into  unemployment  since 
2010 and demand has not picked up, the share of the unemployed who remained without a job 
for more than one year started to swell from a third in the third quarter of 2009 to 43% two 
years later. In the third quarter of 2011, close to 10 million people were unemployed for more 
than a year. This structural feature of unemployment will make it more and more persistent 
and difficult to bring down. 

After  bottoming  out  in  mid-2008  just  after  unemployment  bottomed,  the  long-term 
unemployment rate in the EU has risen again. At 4.1% in the third quarter of 2011, the long-
term  unemployment  rate  was  still  up  1.6  pps  compared  to  the  2.5%  recorded  in  the  third 
quarter of 2008. As a result of three years of deterioration, the long-term unemployment rate 
now varies more markedly across Member States, ranging from around 1% in Austria to more 
than 8% in Ireland, Lithuania, Greece, Slovakia and Spain. More than half of the unemployed 
have been without a job for more than a year in these latter countries (except for Spain) but 
also in Bulgaria, Estonia, Italy, and Latvia, while in Austria, Cyprus, Denmark, Finland and 
Sweden less than 30% of the unemployed have been without a job for more than one year. 

If  the  recent  upturn  in  the  unemployment  trend  continues,  long-term  unemployment  might 
intensify. In line with the impact of increased unemployment, the increased risk of long-term 
unemployment  may  have  more  severe  effects  on  many  population  segments.  The  negative 
effects in terms of loss of human capital, including skill depreciation and loss of motivation, 
and thus of future employability, career prospects and earnings can be significant. Moreover, 
long-term unemployment may often lead to eventual discouragement and exit from the labour 
market.  Overall,  long-term  unemployment  results  in  a  high  risk  of  poverty  and  associated 
social failure. Considering total unemployment, in  2010  just below 65% of the  unemployed 
(aged 18+) in the EU were ranked as living in poverty or social exclusion. Remaining in long-
term  unemployment  for  several  years  may  lead  to  a  persistent  risk  of  poverty  and  social 
exclusion10. Long-term unemployment puts an added burden on the social safety nets of last 
resort  (such  as  minimum  income).  As  people  lose  their  unemployment  benefits  they  are 
relying more and more on these benefits of last resort.  

10 

See also "Special Focus: Social impact of the crisis" in EU Employment and Social Situation Quarterly 
Review, December 2011. 

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2.4. 

Evolution by age, gender and skill level 

The  youth  (15-24)  unemployment  rate  jumped  rapidly  from  the  beginning  of  2008,  rising 
from  15%  in  February  2008  to  more  than  21%  in  the  beginning  of  2010,  before  easing 
moderately  and  stabilising  until  spring  2011.  Subsequently,  the  rate  went  up  to  an 
unprecedented high level of 22.4% in February 2012 (see Section 2.5). For adults (25-74), the 
unemployment  rate  increase  since  spring  2011  has  similarly  cancelled  out  the  previous 
amelioration, reaching 8.8% in February 2012. This new phase of unemployment increase has 
again disproportionately hit young people, since three out of ten new unemployed persons are 
young,  at  a  time  when  youth  is  only  10%  of  the  total  labour  force.  Consequently,  the  gap 
between young people and adults has widened to 13.6 pps, compared to 9.4 pps in 2007. 

At  EU  aggregate  level,  men  were  proportionally  worse  hit  than  women  by  the  surge  in 
unemployment  between  April  2008  and  April  2010,  representing  two  thirds  of  the  new 
jobless.  Among  the  1.86  million  additional  unemployed  since  March  2011,  men  were 
predominant (58%) compared to women (42%), mirroring the previous 2009 unemployment 
rise, which also affected men more, but the gap was even bigger at that time. However, the 
current measures  of fiscal consolidations could have a greater impact on the unemployment 
rate of women who are more frequently employed in the public sector11. In February 2012, the 
gender gap was almost closed, as men posted a 10.1% unemployment rate (+0.8 pp on March 
2011),  whereas  the  increase  was  0.6  pp  on  March  2011  for  women  (to  10.2%).  Overall,  in 
February  2012,  there  were  5.1  million  more  unemployed  men  and  3.3  million  more 
unemployed women than in March 2008.  

Standing  at  around  16%  in  the  third  quarter  of  2011,  the  unemployment  rate  for  the  low-
skilled remained well up on the level of 10½% recorded four years earlier, before the crisis hit 
the labour market. Moreover, the gap in the unemployment rate between the low-skilled and 
the high-skilled widened to above 10 pps. The low-skilled have experienced the most severe 
increase  in  their  unemployment  rate  since  the  crisis  first  hit  their  labour  market,  with  rates 
rising by just below 5 pps over the three years to the third quarter of 2011, compared to rises 
of 2.5 and 1.7 pps for the medium- and high-skilled respectively.  

2.5. 

Youth: unemployment and inactivity 

The level of youth unemployment remains very worrying, reaching 22.4% in February 2012, 
1.4 pps up on February 2011. The unemployment rate for young women stood at 21.5% and 
for young men at 23.1%. There were 5.5 million young people unemployed in February 2012, 
an increase by 222 000 compared to the beginning of 2011.  

Huge contrasts persist between Member States: the youth unemployment rate is higher than 
20%  in  about  two-thirds  of  countries  and  exceeds  50%  in  Spain  and  Greece.  Another  six 
countries  posted  youth  unemployment  rates  significantly  above  the  EU  average  (and  above 
the 30% mark), i.e. Portugal, Lithuania, Slovakia, Bulgaria, Italy and Ireland. Conversely, it is 
less than 10% in only three countries: Germany (8.2%), Austria (8.3%) and the Netherlands 
(9.4%). 

The inactivity of young people in the EU has continued to rise, although recently at a slower 
pace. In the third quarter of 2011, the inactivity rate for young people, at 56.0%, was up by 
0.3  pp  compared  to  a  year  earlier.  The  increase  in  youth  inactivity  may  partly  result  from 

11 

See also "The impact of the economic crisis on the situation of women and men and on gender equality 
policies", report from IRS and FGB, commissioned by DG JUST. 

EN 

12 

   EN 

                                                 
discouragement. In the third quarter of 2011, among those who were inactive, around 2% of 
young people were seeking employment (but were not classified as ILO unemployed), while 
around  12%  wanted  to  work  but  were  not  seeking  employment  —  both  shares  have  not 
changed much over the 2010. In fact, the share of inactive youth who think that no work is 
available increased from 1.6% in 2009 to 1.8% in 2010. 

At the same time, the share of young persons who are inactive because of being in education 
and training, which is the main reason for inactivity, has remained broadly stable since 2005, 
at  87-88%.  Given  this  high  share,  inactivity  as  such  should  not  be  a  consideration,  but  it  is 
young people who are neither in employment, education or training (NEET), which constitute 
the most problematic group. In the second quarter of 2011, more than 13% of young people 
were in this case, slightly up on the second quarter of 2010; this is 2 pps above the 2008 level. 
In the same period, the share of inactive youth who think that no work is available increased 
from 1.3% to 1.8%.  

to 

temporary  work  contracts,  has  exacerbated 

The marked deterioration in the labour market situation for young people during the crisis of 
2008-2009  and  the  current  downturn  in  the  labour  market,  reflecting  in  part  their  high 
exposure 
the  challenges  of  youth 
unemployment.  At  5.5  million,  youth  unemployment  in  the  EU  is  up  by  nearly  40%  (1.4 
million)  compared  to  the  low  of  spring  2008.  The  period  since  spring  2008  can  be  divided 
into  three  phases:  the  initial  years  of  2008-2009  with  a  marked  increase  in  unemployment 
among  young  men,  a  weak  recovery  in  2010-2011  when  unemployment  stabilised  and  any 
small unemployment increases were driven by women, and the period since May 2011 where 
both young women and men contributed to the unemployment rise.  

The increase in the long-term unemployment rate for young people during the crisis was more 
noticeable  than  for  other  age  groups,  though  the  rise  levelled  out  by  mid-2011.  In  the  third 
quarter  of  2011,  the  long-term  unemployment  rate  for  young  people  was  up  by  0.5  pp 
compared  to  a  year  earlier,  an  increase  lower  than  for  adults  and  older  people  aged  55-64. 
Overall,  the  long-term  unemployment  rate  for  youth  increased  by  2.5  pps  from  its  low  of 
3.4% in the third quarter of 2008 to 6.4% three years later, while the rate for adults rose by 1.7 
pps  from  2.2%  to  3.9%  in  the  same  period.  The  recent  unfavourable  developments  in 
unemployment  for  youth  may  soon  intensify  the  long-term  unemployment  issue  and  have 
serious social consequences. 

EN 

13 

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3. 

JOB CREATION: SECTORAL ASPECTS 

3.1. 

Evolution by sector 

Chart 7: Top 10 "job creating" service sectors between 1995 and 2009 

Other business activities

Health and social work

Hotels and restaurants

Retail trade

Education

Wholesale trade 

Computer and related activities

Recreational, cultural and sporting activities

Activities of households

Supporting and auxiliary transport activities

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Source: Eurostat, National accounts, R1 

Service  sectors  occupy  an  increasingly  large  share  of  the  EU  economy.  They  represented 
about  three  quarters  of  the  economy  in  2010,  up  from  little  more  than  two  thirds  in  1995. 
Services are also increasingly offered by the manufacturing sector, of which the share in total 
value added decreased from 20% to 15% over the same time period12. The share of agriculture 
has diminished from around 3% to 2%, while construction, as well as mining and quarrying, 
remained roughly stable at 6% and 1% respectively.  

Changes  in  the  industrial  structure  are  also  reflected  in  employment.  Among  other  impacts, 
these  sectoral  shifts  played  a  role  in  the  ongoing  trend  of  jobs  and  wage  polarisation  in  the 
EU,  whereby  the  job  creation  in  the  expanding  service  sector  has  been  concentrated  in 
relatively high and low pay levels, while the shrinkage of manufacturing (accelerated in the 
crisis and accompanied by deflation of the construction sector bubble) has brought about large 
destruction  of  medium-paid  jobs13.  The  large  majority  of  the  23  million  extra  jobs  created 
since 1995 were in services. Except for health and social work and supporting and auxiliary 
transport activities, these sectors also contributed most to growth in services. Contrary to that, 
financial intermediation, public administration and post and telecommunications were in top 
10 "growing" services in  terms  of output, however they did not qualify among top 10 "job-
creating" service sectors. 

12 

13 

High-tech  products  are  often  sold  in  combination  with  maintenance  services.  See  European 
Competitiveness Report 2011 for more details about the phenomenon of ‘convergence process’ between 
manufacturing 
services 
(http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=5702&lang=en). 
For  a  detailed  analysis,  see  Employment  and  Social  developments  in  Europe  2011,  chapter  1  ( 
http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=6176 ). 

and 

EN 

14 

   EN 

 
 
                                                 
In  contrast  to  services,  primary  and  secondary  sectors  have  lost  about  10  million  jobs  since 
the mid-1990s. While average annual employment growth in the EU in 1995-2010 was 0.7%, 
it was -1.1% in manufacturing industries. The losses of jobs in industry reflect technological 
progress  and  greater  productivity,  outsourcing  or  relocation  strategies,  as  well  as  changing 
consumer  demand.  In  addition  to  that,  the  recession  and  crisis  severely  impacted  industry 
employment, which decreased by 4.6 million jobs over 2008-2010. In manufacturing, only the 
car  sector  contributed  both  to  job  creation  and  to  growth  in  the  industrial  sector.  Besides 
transport equipment, manufacturing employment grew only in two other sub-sectors, rubber 
and plastics and other manufacturing.  

Human capital is an important growth factor and improves the international competitiveness 
of companies and sectors. The leading sectors in employing high-skilled people in the EU in 
2009  were  education,  professional,  scientific  and  technical  activities;  the  information  and 
communication sector; the pharmaceutical industry; the financial and insurance activities and 
human  health  and  social  work  (more  than  40%  of  employment)14.  Financial  and  insurance 
activities have the lowest proportion of low skilled.  

Sectors  with  a  high  component  of  high-education  employment  are  less  sensitive  to 
competition from low-wage countries. E.g. the chemical industry, a manufacturing sector with 
33% high-skilled employed, ranks highly in revealed comparative advantage15. Furthermore, 
the high-tech sector, i.e. sectors with a large proportion of high-skilled jobs, has grown much 
more rapidly than the rest of economy (4.1% versus 1.8%) and it has created 1.4 million extra 
jobs  between  1995  and  2009.  This  is  particularly  the  case  for  high-tech  services  such  as 
telecommunications, computer services and research & development16. 

Developments  in  2011  show  that  the  services  sector  continued  to  lead  the  employment 
recovery,  mainly  in  financial  services  and  in  the  trade  sector.  After  strong  losses,  the 
construction  sector  is  stabilising,  but  the  job  destruction  in  the  public  sector  is  expected  to 
intensify. The industrial sector is not yet in growth territory – except for export-led segments 
as is the case in Germany  and  Sweden - while the unwinding of labour hoarding  should  be 
exhausted by now and business services are strongly positively oriented. This diverse picture 
is expected to remain broadly the pattern for 2012 although any sustained downturn in growth 
will  clearly  have  a  negative  effect.  According  to  the  Commission's  business  surveys, 
employment  expectations  in  the  EU  have  declined  continuously  since  reaching  a  peak  in 
March 2011 in industry, services, and retail trade. Employment expectations in construction 
remain stable at a low level.  

14 

15 

16 

- 

2011 

Formal  educational  attainment  according  to  the  International  Standard  Classification  of  Education 
(ISCED97) was used as a proxy for skills. Levels of education were aggregated to three categories: low 
skilled  (0-2),  medium  skilled  (3  and  4)  and  high-skilled  (5  and  6).  European  Commission,  Industrial 
Structure 
Performance 
(http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=5635&lang=en). 
Even though wage differences can show countries dis/advantages, the relevant indicator for assessing 
cost  competitiveness  is  unit  labour  costs.  Moreover,  gains  from  trade,  for  both  high-  and  low-wage 
countries,  are  determined  by  comparative,  rather  than  absolute,  advantages.  (see  Industrial  Structure 
2011 
Performance 
(http://ec.europa.eu/enterprise/newsroom/cf/itemdetail.cfm?item_id=5635&lang=en). 
Background  presentation  by  President  Barroso 
http://ec.europa.eu/europe2020/documents/documents-and-reports/subject/europe-2020-
presentations/index_en.htm  

to  European  Council,  23  October  2011. 

Trends 

Trends 

and 

and 

- 

EN 

15 

   EN 

                                                 
3.2. 

SMEs 

Between 2002 and 2010, net employment in the EU rose substantially, by an average of 1.1 
million  new  jobs  per  year.  85%  of  that  net  employment  growth  was  created  by  small  and 
medium-sized enterprises (SMEs), according to a study17 made for DG ENTR. This figure is 
considerably higher than the 67% share of SMEs in total employment.  

With annual average growth at 1%, employment growth for SMEs was higher than for large 
enterprises  (0.5%).  A  clear  exception  is  the  trade  sector,  in  which  employment  in  SMEs 
increased by 0.7% annually, compared to 2.2% in large enterprises. This is due to the strong 
increase  of  large  trade  enterprises,  in  particular  in  sales,  maintenance  and  repair  of  motor 
vehicles. 58% of net employment growth in the EU was created by micro firms (less than 10 
employees). 

The  study  has  also  shown  that  new  firms  (younger  than  five  years)  are  responsible  for  an 
overwhelming majority of the new jobs. New enterprises operating in business services create 
more  than  a  quarter  (27%)  of  the  new  jobs,  while  the  new  firms  in  transport  and 
communication contribute least (6%). 

3.3.  White jobs  

Chart  8:  Employment  growth  in  the  health  and  social  work  sector,  1995-2010  (average 
annual growth for each period, in %) 

All industries

Health and social work

.
a
.
p
h
t
w
o
r
G

2.5

2.0

1.5

1.0

0.5

0.0

1995-2000

2000-2005

2005-2010

Source: Eurostat, National accounts by 60 branches - employment data [nama_nace60_e] 

Employment in the EU health and social work sector – the so-called "white jobs" - is growing 
fast (Chart 8), due to population ageing and an  expansion of services  to better meet quality 
requirements and rising demand18. Its share in total EU employment increased from 8.6% in 
2000  to  9.9%  in  2010.  Over  the  same  period,  the  total  number  of  workers  in  the  sector 
increased  by  3.9  million,  which  accounts  for  more  than  a  quarter  of  total  net  employment 

17 

18 

EN 

study 

ENTR, 
See 
analysis/performance-review/pdf/do-smes-create-more-and-better-jobs_en.pdf  
Statistical Classification of Economic Activities (NACE), rev. 1, N Health and social work. 

http://ec.europa.eu/enterprise/policies/sme/facts-figures-

DG 

for 

16 

   EN 

 
 
                                                 
growth  in  the  EU  economy.  The  vast  majority  of  22  million  people  employed  in  the  health 
and social services in 2010 worked in the EU-15 Member States (89% or 19.6 million). The 
health and social services sector generates around 5% of the total economic output in the EU-
27. 

The sector has also an important employment potential in the future given the ageing of the 
population and increased demand for health and social services. In the EU-27, between 2008 
and 2060, the population aged 65+ is projected to increase from 84.6 to 151.5 million, while 
the population aged 80+ is projected to increase from 21.8 to 61.4 million.  

Employment growth is forecast to slow, with white jobs increasing on average by 0.5% p.a. 
between 2010 and 2020 and all sectors seeing only 0.3% p.a. average growth19. The size of 
the  sector  and  its  relatively  fast  growth  suggest  that  it  will  remain  a  key  actor  in  providing 
new jobs in the years to come and of paramount importance if macro conditions produce low 
growth. In addition to more than 1 million new jobs created in this sector, there will be about 
7 million additional job openings due to the replacement needs, i.e. around 8 million of total 
job openings. Although most jobs will require highly qualified people (more than 5 million) 
there will be still job opportunities for those with medium and even low qualification20. 

Yet,  in  order  to  exploit  this  job  creation  potential,  the  sector  has  to  overcome  several 
challenges. Its overwhelmingly female workforce is ageing. There are growing imbalances in 
skill  levels  and  working  patterns;  whereas  recruitment  and  retention  are  hampered  by 
demanding  working  conditions  as  well  as  by  low  and  slowly  growing  wages21.  Moreover, 
social protection, including health and social services, is mostly financed from public budgets. 
Maintaining  an  adequate  supply  and  quality  of  health  and  social  services  under  increasing 
budget constraints is a key challenge faced by policy makers. The reports from independent 
experts on social protection policies confirm that social services have already been affected by 
austerity measures aimed at reducing public expenditure. 

For  further  information  on  white  jobs,  please  refer  to  the  Commission  Staff  Working 
Document on the health workforce and a Commission Staff Working Document on "personal 
and  household  services"  which  addresses  social  care  at  home,  childcare  and  the  long-term 
care  of  the  elderly,  both  informal  and  formal.  Both  documents  are  also  accompanying  the 
Communication “Towards a job-rich recovery”.  

19 

20 

21 

on 

and 

supply 

demand 

forecast 

new  Cedefop  Skills 

Based 
(http://www.cedefop.europa.eu/EN/about-cedefop/projects/forecasting-skill-demand-and-supply/skills-
forecasts.aspx). 
In the period up to 2020 the forecast indicates around 80 million job opportunities in the EU due to a 
modest  net  increase  in  employment  of  around  7.5  million  new  jobs  (expansion  demand)  and  around 
72.5  million  jobs  that  will  need  to  be  filled  as  people  retire  or  leave  the  workforce  (replacement 
demand). Cedefop, ibid. 
More detailed analysis can be found in the Employment in Europe 2009 report and the Second Biennial 
Report 
2011 
(http://ec.europa.eu/social/main.jsp?catId=794&langId=en&pubId=5940&type=2&furtherPubs=yes ). 

released 

services 

interest, 

general 

social 

2012 

on 

of 

in 

EN 

17 

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3.4. 

Green jobs 

Green  jobs22  cover  a  wide  range  of  employment  opportunities  with  many  environment-
improving  jobs  in  non-environmental  industries,  e.g.  eco  auditors  in  steel  plants  or  car 
workers  producing  hybrid  vehicles.  Jobs  growth  in  the  eco-industry  has  been  positive 
throughout  the  recession  and  is  forecast  to  continue  to  be  quite  strong.  Total  numbers 
employed  have  grown  from  2.2  million  in  2000  to  2.7  million  in  2008,  which  represented 
0.8% of the total workforce. The average annual growth (2000 – 2008) in eco-industries was 
2.7%, whereas it was 1% in the total economy. Employment is forecast to reach around 3.4 
million in 201223.  

The  products  and  services  of  this  sector  are  enabling  productivity  gains  and  innovation  in 
many other sectors and it is these green skills and associated green jobs that can be a major 
source of demand for new jobs. Nevertheless, expected EU net employment and GDP growth 
impacts of the move to a greener economy at the aggregate level are modest, reaching around 
1-1.5%  by  202024.  On  the  other  hand,  significant  impacts  are  expected  at  sectoral  and  local 
levels. Sectors  that produce investment  goods are expected to create more jobs, while those 
that produce consumer goods see a fall in employment reflecting the impact on eroding real 
disposable  income  due  to  increases  in  prices  of  energy  goods.  Employment  in  energy 
transformation  and  supply  sectors,  such  as  manufactured  fuels  and  gas  distribution,  is 
expected to fall in comparison to baseline, in line with reduced demand for (non-renewable) 
energy.  The  results  for  output  and  employment  in  the  energy-intensive  sectors  are  unclear: 
some could lose out due to competitiveness effects, while some feature in the value chains of 
investment goods so could benefit. 

The main driver of the employment effects in the promotion of the renewable energy sector 
and energy efficiency are the substantial investments required to upgrade the infrastructure — 
which will create jobs in construction and mechanical engineering — and their supply chains. 
Analysis  undertaken  for  the  Commission  suggests  that  whilst  annual  capital  investment  in 
renewable energy today averages €35bn, this woul d need to rapidly double to €70bn to ensure 
we achieve renewable goals. However, according to the International Energy Agency (IEA) 
investments in renewable energies in Europe decreased by 10% in 2009 while they increased 
by  more  than  50%  in  China.  Given  public  finance  constraints,  it  is  important  to  increase 
private-sector investment. 

The greening of the European economy will lead to a redefinition of many jobs across almost 
all  sectors.  In  an  initial  phase,  high-skilled  workers  may  benefit  more  as  transitions  to  new 
activities  call  for  the  implementation  of  advanced  technologies.  However,  lower-skilled 
workers should also be able to fill these jobs by receiving adequate training. In any case, the 
role of employment services at large will be key in accompanying these transitions through a 

22 

23 

24 

A  narrow  definition  for  green  jobs  is  those  in  eco-industries  which  produce  goods  and  services  to 
measure,  prevent,  limit,  or  correct  environmental  damage  to  water,  air,  and  soil,  as  well  as  problems 
related to noise, waste, and ecosystems. This includes technologies, products, and services that reduce 
environmental  risk  and  minimise  pollution  and  resources.  For  more  detailed  discussion  of  green  jobs 
see "Employment in Europe Report" (2009), OECD: "The job potential of a shift towards a low-carbon 
economy" (forthcoming) and ILO-EC (2011) "Towards a greener economy: the social dimension". 
Ecorys, European Commission, forthcoming, "The number of jobs dependent on the Environment and 
Resource Efficiency Improvements". 
A comprehensive literature overview of different studies is provided in Cambridge Econometrics et al, 
(2011), Studies on sustainability issues – green jobs; trade and labour; study prepared for the European 
Commission, DG Employment, social affairs and inclusion. 

EN 

18 

   EN 

                                                 
thorough  provision  of  services  such  as  counselling,  advice,  training  and  general  re-skilling 
initiatives to ensure participation of the most vulnerable.  

New  investments  and  regulation  will  bring  additional  demand  for  skilled  workers  and  the 
rapid market developments in certain sectors could induce skills shortages especially for rare 
and  specialised  skills/occupations  or  just  simply  for  skills/occupations  that  will  see  a  steep 
rise  in  demand  due  to  expansion  of  new  industries  trying  to  absorb  new.  At  the  same  time 
some  of  the  analysis  show,  that  deficits  in  management  skills  and  technical,  job-specific 
skills, especially related to science, technology, engineering and mathematics (STEM) might 
matter  more  for  the  EU  capacity  for  green  growth  than  shortages  in  specialist  ‘green  tech’ 
know-how25. 

For  further  information  on  green  jobs,  please  refer  to  the  Staff  Working  Document  on 
"Exploiting  the  employment  potential  of  green  growth"  which  is  also  accompanying  the 
Communication “Towards a job-rich recovery”.  

3.5. 

Digital jobs 

The demand for ICT professionals continues to grow. Even during the crisis, the number of 
ICT  practitioners  grew  at  around  3%  a  year.  By  the  end  of  2010,  4.1  million  Europeans 
worked as ICT practitioners in the narrowest definition (programmers and computer assistant 
staff),  up  from  2.7  million  ten  years  earlier,  with  another  1.1  million  in  closely  related 
occupations.  Furthermore,  labour  demand  is  already  outstripping  the  supply  of  ICT 
practitioners, and will continue to do so26. 

Advanced ICT professions undoubtedly require a graduate degree in a computer-related field. 
However,  for  many  other  ICT  occupations,  shorter  training  is  sufficient,  especially  for 
workers  with  experience  in  technical  or  scientific  areas.  ICTs  can  therefore  be  a  promising 
option even for workers who become unemployed in mid-career. 

Moreover,  the  emergence  of  new  ICT  applications  creates  the  potential  for  talented  ICT 
practitioners to start-up their own company. Since ICT services tend to be easily scalable, ICT 
start-ups  usually  have  a  higher  growth  potential  than  other  start-ups,  and  thus  a  significant 
employment potential as well. Furthermore, cloud computing services reduce the need for up-
front investment in ICT hardware. 

Beyond  ICT  professionals,  we  have  to  recognise  that  most  jobs  already  require  some  ICT 
knowledge.  In  fact,  advanced  ICT  users  account  for  18.5%  of  employed  persons,  ranging 
from 9% to 31% in different Member States27. It has been forecast that by 2015 90% of jobs 
will  need  at  least  basic  ICT  skills28.  Acquiring  and  maintaining  ICT  skills  are  vital  in 
becoming and remaining employable. 

For  further  information  on  digital  jobs,  please  refer  to  the  Commission  Staff  Working 
Document  on  "The  role  of  ICT  for  employment",  also  accompanying  the  Communication 
“Towards a job-rich recovery”.  

25 
26 

27 
28 

Cedefop (2010), Skills for green jobs, European Synthesis Report. 
Report for the European Commission “Anticipating the Evolution of the Supply and Demand of e-Skills 
in Europe (2010-2015)” Empirica and IDC Europe, December 2009. Updated forecast presented at the 
European e-Skills Conference on 13 December 2011 in Brussels. 
http://ec.europa.eu/information_society/digital-agenda/scoreboard/docs/pillar/digitalliteracy.pdf 
IDC White Paper "Post Crisis: e-Skills Are Needed to Drive Europe's Innovation Society" (November 
2009). 

EN 

19 

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EN 

20 

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4. 

SKILLS AND MOBILITY 

4.1. 

Skills, mismatches, demography and mobility  

Even though the EU is undergoing a crisis in which jobs are being lost, certain Member States 
and employment categories continue to experience a shortage of labour. Unemployment from 
declining  sectors  co-exists  with  encouraging  signs  of  economic  recovery  and  new  labour 
demands from high-productivity industries. Vacancies in some economic sectors (such as IT 
specialists, health care, engineers) are not easy to fill. At the overall EU level this is reflected 
in a coincident rise in unemployment and vacancy rates. Over the next years, ageing will have 
serious  implications  on  both  the  size  and  age  structure  of  the  workforce,  making  the  match 
between labour supply and labour demand even more difficult. Currently, the EU workforce is 
still  growing  at  a  very  slow  pace,  with  half  of  the  Member  States  already  experiencing  a 
declining workforce. By 2014, the overall EU workforce will start declining. In the long run, 
it  is  estimated  that  the  working-age  population  in  the  EU  will  shrink  by  more  than  10% 
between 2010 and 205029. The Europe 2020 Strategy puts particular emphasis on promoting 
labour  mobility,  both  domestic  and  migrant,  for  addressing  labour  and  skill  shortages  and 
rendering the EU workforce more adaptable to change. 

While fighting against unemployment, Europe should be able in the future to respond quickly 
to  the  emerging  new  demands  from  the  most  competitive  parts  of  the  economy.  Within  the 
very competitive global environment, a slow or inadequate response may imply the loss of a 
new  economic  activity  and  the  jobs  associated  with  it.  Recent  Cedefop  studies  on  Europe's 
future  skill  needs  indicate  that  labour  market  needs  in  the  most  dynamic  economic  sectors 
may  rise  significantly  between  now  and  2020,  while  those  in  low-productivity  sectors  may 
further decline. Deficits in qualified job-specific skills are already observed in areas critical 
for innovation. Recent Cedefop reports on future labour market needs indicate a rapid shift of 
labour  demand  towards  higher  qualifications.  According  to  Cedefop  by  2020,  42%  of 
employment will be in high-skilled non-manual occupations30. Migration from outside the EU 
could play a role in filling these identified labour shortages.  

4.2. 

Vacancies and unemployment 

The coincident rise in unemployment and vacancy rates, mentioned above, can be seen at the 
EU level, where the job vacancy rate has been picking up. At 1.5% in the fourth quarter of 
2011,  it  was  unchanged  over  one  year  ago.  This  means  more  than  six  unemployed  per 
vacancy. Some Member States – Austria, Germany, Belgium and Finland – see rather higher 
vacancy  rates  and,  with  lower  unemployment  than  the  EU  average,  a  much  better  demand 
situation of two to four unemployed per vacancy. This latter situation suggests an economy 
which is much closer to seeing real labour shortages in some sectors. However, Poland, which 
remained relatively unscathed during the crisis, is seeing little rise in vacancies and Spain has 
seen  a  further  decline  in  vacancies  to  1.0%,  thus  giving  a  rate  of  about  23  unemployed  per 
vacancy.  

29 

30 

Eurostat,  Population  statistics,  Population  projections,  Europop  2010.  These  projections  are  based  on 
the  assumptions  of  positive  net  migration  to  the  EU.  Without  taking  migration  into  account,  the 
decrease  of  the  working-age  population  in  the  EU  between  2010  and  2050  would  be  much  more 
pronounced (more than 25%). 
Cedefop (2010), Skills supply and demand in Europe – Medium-term forecasts up to 2020. 

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Chart 9: Beveridge curves for the EU-27 and the largest Member States 

10

LSI

9

8

7

6

5

4

3

2

1

0

08q1

EU-27

11q4

11q1

UR

10q1

09q1

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

LSI

08q1

France

11q1

09q1

11q4

UR

10q1

LSI

11q4

Germany

11q1

08q1

09q1

10q1

UR

5.5

6.0

6.5

7.0

7.5

8.0

8.5

LSI

08q1

United Kingdom

11q4

09q1

11q1

10q1

UR

12

10

8

6

4

2

0

18

16

14

12

10

8

6

4

2

0

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

LSI

08q1

Spain

11q1

11q4

UR

09q1

10q1

6.5

8.5

10.5

12.5

14.5

16.5

18.5

20.5

22.5

24.5

LSI

08q1

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Italy

09q1

11q3

10q1

11q1

6.5

7.0

7.5

8.0

8.5

UR

9.0

9

8

7

6

5

4

3

2

1

0

3

3

2

2

1

1

0

Source: Eurostat. UR = unemployment rate (%), quarterly average [une_rt_q]. LSI = labour shortage indicator, derived from 
EU  business  survey  results  (%  of  manufacturing  firms  pointing  to  labour  shortage  as  a  factor  limiting  production) 
[bsin_q_r2]. 

Plotting the Beveridge curve, which relates job vacancies and unemployment rates, suggests a 
risk  of  increased  mismatches  of  skills  post-crisis  and  higher  so-called  equilibrium 
unemployment31.  At  the  EU  level,  both  unemployment  and  vacancy  rates  increased  since 
early 2010, suggesting such a risk. Individual Member States see rather different movements 
in  their  Beveridge  curve.  Germany  has  seen  a  leftwards  shift  indicating  lower  equilibrium 
unemployment and less labour demand and supply mismatch. Conversely, the French, Italian 
and the UK Beveridge curves are more similar to the EU-level curve. Finally, there is no clear 
movement  in  the  labour  shortage  indicator  in  Spain,  while  unemployment  continues  to  rise. 
This diversity reflects a polarisation of labour market and macro-economic situations across 
the EU. 

4.3. 

Intra-EU mobility  

Cross-border labour mobility in the EU has increased over the last decade thanks to the flows 
fostered  by  the  2004  and  2007  enlargements.  The  number  of  EU  citizens  living  in  another 
Member State (than their own) has increased by 5 million between the end of 2003 and the 

31 

See  also  Special  Focus  in  the  Quarterly  Review  of  the  EU  Employment  and  Social  Situation,  March 
2011 and March 2012. 

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end of 2010 (from 7.7 to 12.7 million)32. Nevertheless, only 2.8% of the working age (15-64) 
European citizens live in another EU Member State than their own.  

International comparisons also indicate that cross border mobility between EU Member States 
is  limited  compared  to  other  regions  (such  as  the  US  or  Australia),  even  when  taking  into 
account mobility between large regions (NUTS1) inside EU Member States, between which 
linguistic  and  administrative  differences  are  quasi  inexistent33.  Although  the  relatively  low 
level of geographic mobility between EU Member States can be explained by the very large 
linguistic diversity and various institutional frameworks, these comparisons still suggest that 
more scope exists for higher geographical mobility in the EU, whether of EU citizens or third-
country nationals.  

Moreover, the massive gaps currently existing between EU countries and regions (even inside 
some Member States) in terms of unemployment rates and job vacancy rates are another sign 
that the potential of geographical labour mobility is insufficiently tapped. Mobility of workers 
is  essential  for  achieving  dynamic  labour  markets,  efficient  matching  of  jobseekers  to  jobs 
and of employers to skills.  

Finally, geographical labour mobility can have large economic benefits for the economies of 
both receiving and sending countries34. For instance, the GDP of EU-15 countries is estimated 
to have increased by almost 1% in the long-run due to the post-enlargement mobility and no 
significant  impact  was  found  on  the  level  of  unemployment  or  wages  of  the  domestic 
workers.  Labour  mobility  flows  have  helped  to  fill  job  vacancies  and  mobile  citizens  have 
higher employment rates than the average working-age population.  

Geographical  labour  mobility  within  the  EU  can  be  a  powerful  adjustment  mechanism  to 
respond to the needs of labour markets by making them more efficient and further adaptable 
to  change  in  economies.  For  instance,  following  the  crisis  of  2008-09,  the  flows  of  mobile 
workers  between  EU  Member  States  has  been  diminishing  due  to  the  decline  of  labour 
demand. Countries such as Ireland and Spain would have had higher unemployment rates than 
they  currently  have,  without  the  adjustment  of  migration  flows  due  to  the  recession  (i.e.: 
reduced inflows and increased outflows)35. 

4.4. 

Employment of third-country nationals 

Around  20  million  third-country  nationals  live  in  the  EU,  thus  making  up  4.0%  of  the  total 
population.  Since  they  tend  to  be  of  working-age,  their  share  of  the  labour  force  is  slightly 
larger,  at  4.5%.  Roughly  a  third  of  the  economically  active  third-country  nationals  have 
settled in their present country of residence within the past seven years36.  

In the early years of this century, large numbers of immigrants arrived in the EU, but with the 
economic downturn in 2009, these numbers fell. In addition to declining immigration, a rise 

32 

33 

34 

35 
36 

Eurostat  migration  statistics  and  EU-Labour  force  survey,  see  details  in  EC,  Employment  and  Social 
Developments in Europe 2011, chapter 6. 
Eurofound, Labour mobility in a transatlantic perspective, 2007 and OECD, 2012 Economic Review of 
the European Union, 2012. 
See  Employment  and  Social  Developments  in  Europe  2011,  chapter  6  and  NIESR,  Labour  mobility 
within the EU – the impact of enlargement and the functioning of the transitional arrangements, 2011. 
Deutsche Bank, Working paper, Labour mobility in the Euro area, 2011. 
For  detailed  figures  on  migration  from  third-countries,  see  Eurostat  publication  'Migrants  in  Europe', 
2011, 
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-08122011-AP/EN/3-08122011-AP-
EN.PDF. 

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23 

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in the flows of return migration to home countries has also been witnessed for many Member 
States, due to a particularly adverse labour market situation among third-country nationals37. 
Nevertheless, the overall population of immigrants has continued to grow, though at a slower 
pace. Statistics  on migration  flows  during 2010 are not yet available but the increase  in the 
number of residence permits granted to third-country nationals in 2010 seems to indicate that 
migration flows from non-EU countries are picking up again, having fallen in 2009. In 2010, 
32.4% (or around 800 000) of all residence permits granted were for remunerated activities.  

In the third quarter of 2011, the employment rate of third-country nationals was 55.5%, much 
below  the  level  recorded  for  nationals  (65.0%)  and  other  EU  nationals  (68.3%).  This  was 
already true before 2008 but the economic downturn made the situation much worse.  

The  gap  between  employment  rates  of  nationals  and  third-country  nationals,  which  was 
already substantial before the economic downturn, has widened. In 2008q2 it was 6.5 pps: one 
year later it was around 9 pps, and since then it has fluctuated between 9 and 10 pps. This gap 
differs widely across education levels. Third-country nationals have higher employment rates 
than nationals in the low-educated category. In the medium-skilled category, however, third-
country  nationals  tend  to  have  lower  rates  than  nationals,  and  the  gap  is  even  wider  in  the 
high-skilled group. This suggests that the skills of migrants residing in the EU are being very 
much under-used.  

Many third-country nationals employed in the EU are over-qualified for the job they have. At 
aggregate  level,  this  can  be  measured  roughly  by  comparing  the  current  occupations  of 
migrant workers with their level of education. In 2010, 46% of highly-educated third-country 
nationals were overqualified for their job, compared to around 20% among nationals. Among 
third-country nationals, the rate of over-qualification was particularly high for women (49%) 
compared  to  men  (44%).  One  of  the  main  factors  appeared  to  be  the  difficulty  in  getting 
recognition  for  qualifications  obtained  outside  the  EU.  Cedefop  studies  also  indicate  that 
workers with a migrant background are disproportionally affected by over-qualification when 
they have acquired their qualifications abroad38. 

In terms of unemployment, third-country nationals have been one of the groups most affected 
by the economic downturn. Their unemployment rate, already high in 2008q2 (14.0%), rose 
very quickly to reach 19.2% one year later, and has remained at high levels (around 19-21%) 
ever since39. The gap between nationals and immigrants from outside the EU increased from 
7.6 pps in 2008q2 to 11 pps one year later, and has remained around that level.  

37 
38 

39 

OECD, Migration Outlook 2011, SOPEMI. 
Cedefop (2011), "Migrated and mismatched? An empirical analysis of skill mismatch among migrants 
and ethnic minorities in Europe", Cedefop research paper. 
The EU average hides however great variations between the Member States and more than 60% of the 
net increase in unemployment among third-country nationals in the period 2008-2011 occurred only in 
Spain. 

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24 

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Chart 10: Unemployment rates by group of citizenship, sex, age and education level, in the 
EU (in %) 

35%

30%

25%

20%

15%

10%

5%

0%

s

l

a
n
o
i
t
a
N

.

.

N
C
T

.

s

l

a
n
o
i
t
a
N

.

.

N
C
T

.

s

l

a
n
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i
t
a
N

2011q2

2008q2

.

.

N
C
T

.

s

l

a
n
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t
a
N

s

l

a
n
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.

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N
C
T

.

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l

a
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a
N

.

.

N
C
T

.

s

l

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a
N

.

.

N
C
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.

.

N
C
T

.

.

.

N
C
T

.

Men

Women

15-24

25-54

55-64

Low

Medium

High

Sex

Age

Education level

Source: Eurostat, EU-LFS, quarterly data 

Third-country nationals in the EU have, on average, a lower level of educational attainment 
than  nationals.  As  many  as  43%  of  economically  active  third-country  nationals  have  a  low 
level  of  education,  compared  to  22%  of  the  nationals.  This  partly  explains  their  higher 
unemployment  rates,  but  it  is  only  one  factor:  third-country  nationals  have  higher 
unemployment levels than nationals whatever their skill level. Other factors at play here are 
difficulties in having third-country qualifications or experience recognized in the EU, lack of 
language proficiency, discrimination and lack of access to information or networks. 

Analysis of the reasons for migration of the third-country nationals currently residing in the 
EU indicate that in many Member States the majority of them arrived for reasons other than 
employment.  Family  reunions  and  asylum  seekers  represent  large  groups  of  lawful  non-
economic  migration  inflows.  These  groups  are  generally  associated  with  higher  levels  of 
unemployment/inactivity, partly for reasons related to the legal access to the labour market.  

In conclusion, analysis of the labour market outcomes of migrants from third countries over 
the past decade indicates that Europe is still far from reaping the full potential of third-country 
nationals currently residing in the EU. At the same time, the EU is currently not attracting the 
migrants that it would need to respond to the challenges in terms of demographic ageing and 
skill shortages. On the basis of the experience gained in other industrialised countries namely 
in  Canada  and  Australia,  it  appears  that  the  EU  could  improve  its  attractiveness  as  a 
destination  for  qualified  migrant  workers  by  promoting  permanent  and  more  transparent 
admission  rules  for  economic  immigrants  while  providing  full  labour  market  access  for 
spouses  and  facilitating  free  mobility  of  migrants  between  EU  Member  States.  Attracting 
talented international students and researchers represents another promising policy pathway.

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5. 

LABOUR MARKET CHALLENGES 

Despite the crisis, substantial progress has been made in EU labour markets since 2000. The 
employment rate for the EU working-age population in 2010 stood at 64.2%, i.e. 0.4 pp below 
the level recorded in 2009 but still 2.1 pps higher than in 2000.  

The severe rise in unemployment over the period 2008-2009 has continued to feed into long-
term  unemployment.  If  the  recent  upturn  in  the  unemployment  trend  continues,  long-term 
unemployment  might  intensify.  The  increased  risk  of  long-term  unemployment  may  have 
severe effects on many population segments. The negative effects in terms of loss of human 
capital, including skill depreciation and loss of motivation, and thus of future employability, 
career  prospects  and  earnings  can  be  significant.  Moreover,  long-term  unemployment  may 
often  lead  to  eventual  discouragement  and  exit  from  the  labour  market.  Overall,  long-term 
unemployment results in a high risk of poverty and associated social failure.  

The youth unemployment rate stood at an unprecedentedly high level of 22.4% in February 
2012.  Young  people  who  are  neither  in  employment,  education  or  training  or  employment 
(NEET), constitute the most problematic group. In the second quarter of 2011, more than 13% 
of young people were in this case, this is 2 pps above the 2008 level. Youth's high exposure to 
temporary  work  contracts  has  exacerbated  the  challenges  of  youth  unemployment.  At  5.5 
million, youth unemployment in the EU is up by nearly 40% compared to the low of spring 
2008. The recent unfavourable developments in unemployment for youth may soon intensify 
the long-term unemployment issue and have serious social consequences.  

There is clear scope for positive spillovers to the labour market from other policies, such as 
policies focusing on SMEs, white, green and ICT jobs. Between 2002 and 2010, 85% of net 
employment  growth  was  created  by  small  and  medium-sized  enterprises  (SMEs), 
considerably higher than the 67%  share  of  SMEs  in total employment. New  firms  (younger 
than five years) are responsible for an overwhelming majority of the new jobs.  

Employment  in  the  health  and  social  work  sector  ("white  jobs")  is  growing  fast,  due  to 
population ageing and an expansion of services to better meet quality requirements and rising 
demand. However, maintaining an adequate supply and quality of health and social services 
under increasing budget constraints is a key challenge faced by policy makers.  

Green  jobs  cover  a  wide  range  of  employment  opportunities  with  many  environment-
improving  jobs  in  non-environmental  industries,  e.g.  eco  auditors  in  steel  plants  or  car 
workers producing hybrid vehicles. The products and services of the eco-industry are enabling 
productivity  gains  and  innovation  in  many  other  sectors  and  it  is  these  green  skills  and 
associated green jobs that can be a major source of demand for new jobs. 

The demand for ICT professionals continues to grow. Beyond ICT professionals, we have to 
recognise  that  most  jobs  already  require  some  ICT  knowledge.  In  fact,  advanced  ICT  users 
account for 18.5% of employed persons, while it has been forecast that by 2015 90% of jobs 
will need at least basic ICT skills. Acquiring and maintaining ICT skills are vital in becoming 
and remaining employable. 

Vacancies in some economic sectors are not easy to fill. This is reflected in a coincident rise 
in  EU  unemployment  and  vacancy  rates.  Over  the  next  years,  ageing  will  have  serious 
implications on both the size and age structure of the workforce, making the match between 

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26 

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labour supply and labour demand even more difficult. By 2014, the overall EU workforce will 
start  declining.  The  Europe  2020  Strategy  puts  particular  emphasis  on  promoting  labour 
mobility, both domestic and migrant, for addressing labour and skill shortages and rendering 
the EU workforce more adaptable to change. The EU should be able in the future to quickly 
respond  to  the  emerging  new  demands  from  the  most  competitive  parts  of  the  economy. 
Recent  studies  on  Europe's  future  skill  needs  indicate  that  labour  market  needs  in  the  most 
dynamic economic sectors may rise significantly between now and 2020, while those in low-
productivity  sectors  may  further  decline.  Deficits  in  qualified  job-specific  skills  are  already 
observed in areas critical for innovation. By 2020, 42% of employment will be in high-skilled 
non-manual occupations. 

Mobility and migration flows should be supportive of labour market smoothing. Nevertheless, 
international comparisons indicate that  cross border mobility between EU Member States is 
limited  compared  to  other  regions.  Although  this  can  be  partly  explained  by  the  very  large 
linguistic diversity and various institutional frameworks, these comparisons still suggest that 
more  scope  exists  for  higher  geographical  mobility  in  the  EU.  Moreover,  the  massive  gaps 
currently existing between EU countries and regions in terms of unemployment rates and job 
vacancy  rates  are  another  sign  that  the  potential  of  geographical  labour  mobility  is 
insufficiently  tapped.  However,  Europe  is  still  far  from  reaping  the  full  potential  of  third-
country  nationals  currently  residing  in  the  EU.  At  the  same  time,  the  EU  is  currently  not 
attracting  the  migrants  that  it  would  need  to  respond  to  the  challenges  in  terms  of 
demographic ageing and skill shortages. 

EN 

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