Labour market developments in Europe, 2012.
Date: 2012-10-04
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: economic indicator, economic recession, labour law, labour market, macroeconomics, pay policy

European Commission

Directorate-General for Economic and Financial Affairs

Labour Market Developments
in Europe, 2012

EUROPEAN ECONOMY

5/2012

ACKNOWLEDGEMENTS

This  report  was  prepared  in  the  Directorate-General  of  Economic  and  Financial  Affairs  under  the 
supervision  of  Marco  Buti  (Director-General),  Servaas  Deroose  (Deputy-Director  General)  and  Anne 
Bucher (Director, Structural Reforms and Competitiveness Directorate).

The  production  of  the  report  was  coordinated  by  Alessandro  Turrini  (Head  of  Unit  – Labour  market 
reforms) and Alfonso Arpaia (Head of Sector – Labour market analysis).

The main contributors were Alfonso Arpaia, Pedro Cardoso, Antonio Dias da Silva, Gábor Koltay, Balázs
Pálvölgyi,  Fabiana  Pierini,  Klara  Stovicek,  Alessandro  Turrini,  Robert  Völter  and  Matteo  Duiella  and 
Dimitri Lorenzani. 

Adam Kowalski provided statistical and editorial assistance. 

Agnieszka Budzińska provided secretarial support. 

The  report  has  benefited  from  useful  comments  and  suggestions  received  from  many  colleagues  in  the 
Directorate-General for Economic and Financial Affairs and in the Directorate-General for Employment 
and  Social  Affairs,  as  well  as  from  Members  of  the  Economic  and  Policy  Committee  of  the  ECOFIN 
Council.

Comments  on  the  report  would  be  gratefully  received  at  the  following  email  address:  ecfin-secretariat-
b3@ec.europa.eu.

ii

CONTENTS

Summary and main findings

Part I:

Labour market developments

1.  General labour market conditions in the euro area and the EU

1.1.

1.2.

1.3.

Introduction

Setting the scene: the EU labour market in an international perspective

Employment and unemployment

1.4. Wages and labour costs

1.5.

Labour market matching and long-term unemployment

2. 

1.6. Conclusions
Labour market developments at country level
2.1.

Introduction

2.2.

2.3.

2.4.

2.5.

Unemployment rates

Employment, participation rates hours worked

Job market flows

Labour Market Status of different groups

2.6. Conclusions

3.  Recent wage and labour cost developments

3.1.

3.2.

3.3.

Introduction

Trends in wages and unit labour costs

Price competitiveness developments

3.4. Conclusion

4.  EU labour market outlook
5.  Policy developments

5.1.

5.2.

5.3.

5.4.

Introduction

Policy trends

Policy action since 2011

Policy priorities and plans looking forward

5.5. Conclusions

Part II:

Thematic chapters

1.  A decade of labour market reforms in the EU: trends, main 

features, outcomes
Introduction
1.1.

1.2. Measuring labour market reforms: methodological aspects

1.3.

1.4.

1.5.

EU labour market reforms 2000-2010: stylized facts

Searching for the determinants of labour market reforms

Assessing the impact of reforms: Some prima-facie evidence

1

5

6 
6

6

10

13

15

17
19 
19

19

21

24

25

31
32 
32

32

39

42
43 
46 
46

46

49

52

60

63

64 
64

64

69

73

76

1.6. Conclusions

79
2.  Macroeconomic implications of Employment Protection Legislation 80 
80

Introduction

2.1.

2.2.

2.3.

2.4.

2.5.

Key concepts about EPL

EPL regimes in EU countries

EPL and economic outcomes

Improving the design of EPL

2.6. Conclusions

80

83

88

93

97

iii

References

A.1. A decade of labour market reforms in the EU

A1.1. Operationalising the direction of labour market reforms

A1.2. Directions of reforms by policy domain and country

A.2. Macroeconomic implications of EPL

Statistical annex

A.1. Labour market data
A.2. Policy variables

LIST OF TABLES

99

103
103

105
107

119

120
149

I.1.1.
I.1.2.

I.1.3.
I.1.4.
I.2.1.
I.2.2.
I.2.3.
I.2.4.

I.2.5.
I.2.6.
I.2.7.
I.2.8.
I.2.9.
I.3.1.
I.3.2.
I.3.3.
I.4.1.

I.5.1.

II.1.1.
II.1.2.
II.1.3.
II.2.1.
II.2.2.
II.2.3.

II.2.4.
II.2.5.
II.2.6.

II.A2.1.

GDP growth and unemployment in selected countries
Unemployment, compensation per employee and GDP growth in the euro area 
and European Union
Employment and value added in sectors
Labour costs by sector
Activity rates, employment rates unemployment rates
Employment growth in different sectors: 2008-2011 (%)
Employment rates by country and gender
Risks of unemployment for the young: ratio between the unemployment rates of 
the young and the adults
Employment, participation and unemployment rate by education
Unemployment rates of the low skilled by country
Share of temporary employees, by age
Part-time and full-time employment, EU-27
Distribution of contract types among the employed in % by country
Decomposition of unit labour costs, y-o-y % change, 2011
Contributions to the final demand deflator, y-o-y % change, 2011
Decomposition of the tax wedge
Employment growth and unemployment rate forecasts by EU Commission (DG 
ECFIN), OECD and IMF
Country-Specific Recommendations 2012-2013 by country and labour market 
field
Reform intensity and country characteristics: cross-country correlations
Determinants of labour market reforms
Reform effects on selected outcome variables
EPL reforms for permanent and fixed term contracts 2008-2010, an overview
Correlation among OECD EPL sub-indices
Correlation coefficients between EPL indicators and measures of labour market 
performance, 18 EU Member States, 1999-2007
EPL and labour market performance 18 EU countries, 1999-2007
Share of temporary contracts and EPL reforms 18 EU countries, 1983-2008
Employment shift from non-tradables to tradables and EPL Insights from 
regressions analysis (6 EU countries, 1985-2008)
Notice periods and severance pay for individual dismissals at three lengths of 
service, 2008

II.A2.2. Conditions under which individual dismissals are fair or unfair, 2008
II.A2.3.

Trial period, 2008

6

7
10
15
21
23
26

27
27
29
30
31
31
37
38
39

44

53
74
76
77
84
85

90
91
92

93

113
114
115

iv

II.A2.4. Compensation pay and related provisions following unjustified dismissal, 2008
Effects of EPL on labour market performance: evidence from existing literature
II.A2.5.

116
117

LIST OF GRAPHS

I.1.1.
I.1.2.
I.1.3.
I.1.4.
I.1.5.

I.1.6.

I.1.7.

I.1.8.

I.1.9.

I.1.10.
I.1.11.

I.1.12.
I.1.13.
I.1.14.
I.1.15.
I.1.16.
I.1.17.
I.1.18.

I.2.1.
I.2.2.

I.2.3.
I.2.4.

I.2.5.

I.2.6.

I.2.7.
I.2.8.
I.2.9.
I.2.10.
I.2.11.
I.2.12.

Employment and GDP growth in the EU
Employment in high and low leverage countries (2007=100)
Employment and fiscal consolidation (2007=100)
Unemployment rates in the EU and the US
Unemployment rate in the euro area and the United States: actual and Okun 
law predictions
Real wages and productivity growth in the euro area and selected advanced 
countries
United States cumulative decline in GDP, number of employees and average 
hours worked per employee
Euro-area cumulative decline in GDP, number of employees and average hours 
worked per employee
Employment, unemployment and participation rates in the EU and the euro 
area
Phillips curve for the euro area 2000-2011: growth of negotiated wages
Phillips curve of the euro area 2000-2011: growth of compensation per 
employee
Compensation per employee and unit labour costs in the euro area
Euro area competitiveness indicators
Job finding and job separation rates in the euro area
Job finding rate by duration of unemployment, euro area
Percentage of the labour force jobless for 1 year or more
Beveridge curve for the euro-area, 1995q1-2011q1
Shifts in the euro-area Beveridge curve and NAWRU (cumulated changes since 
1996)
Evolution of distribution of unemployment rates in the EU in recent years
Unemployment rates in the EU Member States: 2008-2011 (15-74 years, as % of 
labour force)
Unemployment rates: actual and prediction from Okun’s law
Distribution of unemployment across EU: percentage share of total EU 
unemployment in 2011
Unemployment in the EU: contributions for the increase in unemployment 
between 2008 and 2011 (in % of the total EU change)
Participation rate: actual and predicted on the basis of GDP and common 
trend
Change in total hours worked (cumulative changes since 2008Q1)
Job finding rates
Unemployment duration in months
Job separation rates
Beveridge curve for Spain, 1996Q1-2012Q1
Shifts in the Spanish Beveridge curve and NAWRU (cumulated changes since 
1996)
Men: employment, participation and unemployment rates, EU 27

I.2.13.
I.2.14. Women: employment, participation and unemployment rates, EU 27
I.2.15.
I.2.16.

Employment rate change by 5-year age group, EU-27
Youth unemployment rates by country (age 15-24)

7
7
9
9

10

10

12

12

13
13

14
14
15
16
16
16
17

17
19

19
20

20

20

22
23
24
24
24
25

25
25
26
26
27

v

I.2.17.
I.2.18.
I.2.19.
I.3.2.
I.3.3.

I.3.4.

I.3.5.

I.3.6.
I.3.7.
I.3.8.

I.3.9.

I.3.10.
I.3.11.

I.3.12.
I.3.13.
I.4.1.
I.4.2.
I.4.3.
I.5.2.
I.5.3.

I.5.4.
II.1.1.
II.1.2.
II.1.3.
II.1.4.
II.1.5.
II.1.6.

II.1.7.

II.1.8.

II.1.9.
II.1.10.
II.2.1.
II.2.2.

II.2.3.

Employment growth by nationality, EU-27
Net migration rates (% of population)
Employment growth by contract type, EU-27
Compensation per employee, y-o-y % change
Compensation per employee, y-o-y % change vs level of compensation in PPS, 
2011
Real product and consumption wages, HICP and GDP deflator, y-o-y % 
change, 2011
Real compensation per employee and productivity, average growth rates 2009-
2011
RULC, y-o-y % change 2011 and unemployment rate in 2010
Compensation per employee by sector, y-o-y % change 2011
Compensation per employee in private and public sector, y-o-y % change, 
2011
Unit labour costs in deficit and surplus countries, euro-area groups weighted 
averages, y-o-y % change
REERs based on ULC deflator, y-o-y % change
REERs based on ULC deflator, GDP deflator and export prices deflator, % 
change, 2011 y-o-y and over the 2008-2011 period.
REERs based on ULC, y-o-y % change, and relative output gap 2011
REERs based on ULC, y-o-y % change 2011 and current account balance 2010
Employment expectations by the EU businesses and actual employment growth
Nominal compensation per employee in EU Member States (% change)
Nominal unit labour costs in the EU Member States (% change)
Percentage change in labour market policy measures expenditure 2007-2010
Percentage change in out-of-work income maintenance and support 2007-
2010
Total number of planned reforms by domain in the EU, 2011- 2012
Number of reforms by domain and country group
Distribution of reforms across policy domains
Fraction of major and targeted reforms
Fraction of reforms aimed at new entrants and incumbents
Direction of reforms by policy domain (average yearly frequency across the EU)
Direction of reforms in the unemployment benefit domain (average yearly 
frequency across the EU)
Direction of reforms in the job protection domain (average yearly frequency 
across the EU)
Government intervention in wage setting (average yearly frequency across the 
EU)
Number of reforms and the unemployment rate
Average number of reforms and unemployment rate, 2000-2010
Evolution of OECD EPL indicators in EU countries
Job finding rate and strictness of overall employment protection legislation, 
2003-2007
Share of temporary workers in total unemployment and strictness of overall 
employment protection legislation, 2003-2007

II.A1.1. Direction of active labour market policy reforms by country (average yearly 

frequency over the 2000-2010 period)

II.A1.2. Direction of early withdrawal reforms by country (average yearly frequency 

over the 2000-2010 period)

II.A1.3. Direction of job protection reforms by country (average yearly frequency over 

the 2000-2010 period)

30
30
30
33

33

34

35
35
36

37

38
40

41
41
42
43
45
45
48

48
57
69
70
70
70
71

72

72

72
73
74
84

89

89

105

105

105

vi

II.A1.4. Direction labour taxation reforms by country (average yearly frequency over 

the 2000-2010 period)

II.A1.5. Direction of other welfare benefit reforms by country (average yearly frequency 

over the 2000-2010 period)

II.A1.6. Direction of unemployment benefit reforms by country (average yearly 

frequency over the 2000-2010 period)

II.A1.7. Direction of wage setting reforms by country(average yearly frequency over 

the 2000-2010 period)

II.A1.8. Direction of working time reforms by country (average yearly frequency over 

II.A2.1.
II.A2.1.

II.A2.1.

II.A2.2.

II.A2.2.

II.A2.2.

the 2000-2010 period)
Benchmarking employment protection regulation, main EPL sub-indicators
Benchmarking employment protection regulation, main EPL sub-indicators -
continued
Benchmarking employment protection regulation, main EPL sub-indicators -
continued
Benchmarking employment protection regulation for individual dismissals, EPL 
sub-indicators for regular employment
Benchmarking employment protection regulation for individual dismissals, EPL 
sub-indicators for regular employment, continued
Benchmarking employment protection regulation for individual dismissals, EPL 
sub-indicators for regular employment, continued

LIST OF BOXES

I.1.1.
I.1.2.
I.5.1.
I.5.2.
I.5.3.
II.1.1.
II.1.2.
II.1.3.

II.2.1.
II.2.2.

Assessing the impact of fiscal consolidation on unemployment
The impact of uncertainty on unemployment
The effectiveness of Active labour market policies: evidence
Labour market reforms in selected countries
Effect of reforms of employment protection legislation
Overview of the LABREF database
Investigating the determinants of labour market reforms with count data
Assessing the impact of reforms from the LABREF database on aggregate 
variables
The construction of OECD EPL indicators
EU directives on collective dismissals and on fixed-term labour

105

106

106

106

106
107

108

109

110

111

112

8
11
47
54
58
67
75

78
83
87

vii

SUMMARY AND MAIN FINDINGS

The employment 
recovery was 
interrupted in the 
course of 2011  amid 
growing uncertainty 
on the resolution of 
the sovereign crisis; a 
new process of job 
shedding has started

The growing 
divergence of 
unemployment rates 
largely reflects 
deleveraging needs 
for the private and 
public sector 

The EU labour  market  in 2011  was  marked by a  sudden interruption of the 
timid  recovery  in  employment.  Employment  started  falling  in  the  mid  of 
2011 amid a reduction of job finding rates and a new process of job shedding 
concerning most of the EU, with job separations surging in a few countries, 
notably Greece and Portugal. 

The EU is the only  major world region  where unemployment is  not falling. 
The overall unemployment rate of the EU is currently heading towards nearly 
10.5%, that of the euro area is about 11%, the highest rate since the start of 
EMU. Since  the  start  of  the  crisis  in  2008,  the  number  of  jobs  lost  totalled 
about 5 million in the EU, 3 million in the euro area.

The current weakening of the labour market is mostly the result of worsening 
economic activity linked to the aggravation of  the  sovereign crisis. In some 
countries, tackling the debt crisis required a resolute fiscal adjustment, which 
had an impact on output and employment. The impact of the debt crisis was 
compounded by the tightening of  financial conditions linked to the ongoing 
deleveraging process. The reduced room for adjusting working hours, which 
have  stabilised  below  pre-crisis  levels,  and  the  increased  uncertainty  on  the 
economic  outlook,  further  contributed  to  a strongly  negative response  of 
employment  to  the  deceleration  of  economic  activity.  In  light  of  the 
widespread  uncertainty,  a  growing  share  of  employment  is  on  temporary 
contracts. 

Aggregate EU unemployment  data  conceal record-high  differences  between 
countries.  The  dispersion  of  unemployment  rates  within  the  euro  area has 
reached an unprecedented level. It has been growing since 2008 and is mostly 
explained  by  worsening  unemployment  in  the  countries  most  concerned  by 
the  sovereign  crisis  and  external  imbalances;  a  process  that  mirrored  a 
parallel  tendency  for  a  number  of  euro-area  surplus  countries,  notably 
Germany, to record strong employment growth. About 40% of the growth in 
unemployment for the overall EU since 2008 is due to the massive increase 
in Spanish  unemployment. In 2011, however, some  noteworthy elements of 
convergence at EU level were observed: the high unemployment rates in the 
Baltics started falling at a fast pace. 

The  unemployment  divergence  within  the  EU  is  partly  the  result  of 
differences in developments in economic activity and partly the outcome of 
different  responses  of  unemployment  to  growth.  In  2011,  the  effect  of  the 
deterioration  in  economic  activity  on  employment  was  much  stronger  than 
expected on the basis of "Okun law" estimates in the countries with persistent 
or  worsening  debt  crises,  notably  Greece,  Spain,  Portugal.  By  contrast,  the 
reduction in unemployment was stronger than expected in the countries well-
advanced  in  the  correction  of  their  external  imbalances  and  with  stabilising 
financial markets, notably the Baltics.

Despite  these  large  differences  in  unemployment  within  the  EU,  migration 
flows have not so far provided a substantial contribution to the reduction of 
the  pool  of  the  unemployed  except  in  a  few  countries,  notably  Latvia  and 
Ireland.

1

European Commission

Labour Market Developments in Europe, 2012

Persistently low job 
finding rates are at the 
root of rising youth 
and long-term 
unemployment and 
contribute to 
worsening labour 
market matching 

On the positive side, 
developments in 
wages and labour 
costs started following 
a path that is 
supportive for the 
adjustment of external
imbalances and 
unemployment 
divergences…

2

Four years after the start of the financial crisis job finding rates remain low in 
most Member States and further worsening in some countries, notably Spain. 
As  a  result  of  the  persistent  low  rate  of  job  creation,  the  duration  of 
unemployment  has  been  rising  in  most  Member  States,  with  the  biggest 
increases  recorded 
the  Baltics.  Youth 
in  Ireland,  Slovakia,  Spain, 
unemployment  rates  increased  dramatically  in  Greece,  Portugal,  Spain,  and 
remained worryingly high in a number of other countries, notably the Baltics.

The  evidence  indicates  that  unemployment
is becoming  increasingly 
structural. The "Beveridge curve" for the euro area has clearly been shifting 
outward  since  2010:  the  same  amount  of  job  vacancies  coexist  with  higher 
unemployment, an  indication  of  worsening  labour  market  matching.  Job 
shedding  in  the  past  years  concerned  especially  the  low-skilled,  which  are 
often  characterised  by  a  relatively  low  capacity  to  re-convert  to  different 
activities and tasks, and  whose employability tends to fall  with the duration 
of  the  unemployment  spell.  The  NAWRU,  the  concept  of  structural 
unemployment consistent with a constant wage growth, is also on the rise in 
most EU countries, and a remarkable co-movement is observed between the 
shift in the Beveridge curve and the NAWRU. 

Although  activity  rates  remained  resilient  in  most  countries  despite  the
persistent  labour  market  slack,  looking  forward  there  is  a  risk  that 
marginally-attached workers could start leaving the labour force.

In  2011,  the  dynamics  of  nominal  compensation  per  employee  started 
reflecting  more  clearly  the  different  needs  to  reduce  unemployment  and 
rebalance external positions.

Within the euro area, while Germany, Belgium, Austria, France and Finland 
recorded  growth  rates  above  2.5%,  compensation  per  employee  declined  in 
Greece,  Ireland  and  Portugal,  and  grew  at  rates  below  1%  in  Spain. A 
recently  concluded  collective  agreement  in  Germany  in  the  metal  and 
electrical  engineering  sector  sets  wage  growth  above  4%.  The  reduction  in 
private  wages in  high-unemployment, external deficit countries,  was  mostly 
linked  to  the  re-negotiation  of  individual  contracts  and  firm-level  contracts, 
but  lately  also  sectoral  collective  contracts  started  setting  lower  wage 
conditions (Greece). 

After  growing  above  productivity  in  2009,  real  compensation  per  employee 
in  2011  expanded  at  a  rate  below  that  of  productivity,  confirming  the  trend 
initiated  in  2010.  This wage  moderation,  much  needed  for  adjusting  labour 
markets in high-unemployment countries, is often stronger than suggested by 
aggregated  data  in  light  of  rising skill-intensity  of  employment.  Not  in  all 
countries,  however,  the  speed  and  breath  of  downward  adjustment  in  real 
wages seems proportionate to the unemployment challenges.

Also  unit  labour  cost  developments  are  increasingly  following  patterns 
supportive  of  external  re-balancing,  with  dynamics  becoming  increasingly 
evident in  countries  with  current  account  surpluses  and  reductions  in a 
number  of  euro-area  countries  in  the  process  of  correcting  past  or  current 
deficits (Greece, Spain, Ireland, Portugal, Slovakia).

Price  competitiveness  developments,  however,  appear  somehow  delinked 
from those in labour cost competitiveness, with gains not yet visible in most

Summary and main findings

countries  with  high  current  account  deficits. While  improvements  in  cost 
competitiveness  are  per-se helpful  to  external  rebalancing,  adjustment  in 
relative  prices  are  needed  not  only  to  support  export  demand  via  reduced 
export  prices  but  also  to  induce  the  necessary  shift  from  the  non-tradable 
sector.  In  the  latter  respect,  a  role  could  be  played  by  structural  reforms 
contributing to reduce mark-ups in the non-tradable sector.

…and the recent 
intensification of 
reform activity across 
the EU will start 
bringing fruits…

Since  the  start of the crisis,  most EU countries  have taken an active reform 
stance, and managed in some cases to pass ambitious reform plans. Not only 
the number of reforms was on the rise, but the orientation of measures taken 
was  more clearly in the sense of creation of  more favourable conditions  for 
employment. 

Recent reform activity appears to be largely in line with the priorities set at 
European level,  notably  measures that help to  mobilise labour, make labour 
markets more dynamic, reduce precariousness, and improve competitiveness. 
Some countries with high unemployment and large external imbalances have 
taken  up  the  challenge  of  improving  the  responsiveness  of  wages  and  their 
labour  market  adjustment  capacity,  by  thoroughly  reforming  their  job 
protection  and  wage  setting  systems.  Activation  and  job  assistance  policies 
have  been  adapted  to  the  growing  labour  market  challenges,  as  well  as 
targeted employment incentives. In some countries, a substantial revision of 
the unemployment benefit system has taken place.

…as confirmed by the 
analysis of past labour 
market reforms in the 
EU contained in the 
report

One of the thematic chapters in the report digs deeper on the main features, 
determinants and effects of labour market reforms carried out in the EU over 
the past decade. The analysis is based on an updated version of the LABREF 
database on labour market reforms developed by DG ECFIN of the European 
Commission  in  cooperation  with  the  Economic  Policy  Committee  of  the 
ECOFIN Council. 

Looking forward, EU 
labour market 
challenges will remain 
high on the policy 
agenda, which 
require a 
comprehensive, 
differentiated, and 
coordinated response 

The  evidence  reveals  that  most  reforms  were  generally  carried  out  in 
response  to  worsening  labour  market  outcomes.  The  analysis  also  supports 
the view that reforms carried out in the EU in the last decade brought fruits,
although with some lags, notably in terms of participation and unemployment 
rates. 

Unemployment  is  becoming  a  very  serious  issue  in  a  number  of  EU 
countries,  with 
increasingly  visible  economic,  social  and  political 
implications. Eventually, reducing substantially unemployment rates requires 
creating the conditions for renewed confidence and resumed labour demand 
on a stable basis. Nonetheless, the immediate challenge is that of  managing 
high and protracted jobless rates, and the associated risk of hysteresis, under 
subdued growth conditions and, in some countries, against the background of 
ongoing processes of deleveraging and external rebalancing.

In  light  of  the  much differentiated  labour  market  conditions  across  Europe, 
and  of  the  important  policy  spillovers,  notably  in  the  euro-area,  the  policy 
response  needs  to  be  differentiated  and  coordinated.  In  this  respect,  EU 
surveillance will continue to play a key role. 

3

European Commission

Labour Market Developments in Europe, 2012

The recent 
momentum towards 
ambitious structural 
reforms favouring 
adjustment needs to 
be maintained in 
countries with major 
labour market 
challenges

Adequate responses 
need to be put in 
places to prevent 
unemployment 
becoming 
entrenched and to 
tackle the social 
consequences of the 
crisis

4

In  this  context,  reforms  pertaining  to  the  functioning  of  the  labour  market 
will continue to play an essential role down the road, particularly to address 
labour-market  related  structural  bottlenecks  to  growth  and  to  foster 
macroeconomic rebalancing. 

As  shown  in  the analysis  presented  in  one  of  the  thematic  chapters  of  this
report,  strict  EPL  is  linked  to  reduced  dynamism  of  the  labour  market  and 
precarious  jobs.  Moreover,  by  hampering  the  inter-sectoral  re-allocation  of 
labour,  rigid  EPL  may  hamper  the  process  of  macroeconomic  rebalancing. 
EPL  reforms,  eventually  linked  to  a  revision  of  unemployment  income 
support systems, appear as a key driver for reviving job creation in sclerotic
labour markets while tackling segmentation and adjustment at the same time. 
Reforms  promoting  wage  adjustment  are  also  key  to  absorb  effectively 
unemployment  while  favouring  the  price  competitiveness  gains  that  are 
needed for the correction of current account deficits.

In  several  countries,  these  reforms,  usually  politically  costly,  were  recently 
carried  out  within  the  framework  of  structural  adjustment  programmes  or 
amid pressures coming from bond markets. 

Greece,  Spain,  Italy,  and  Portugal,  took  measures  that  were  broad  and  far-
reaching. Looking forward, in light of the seriousness of the challenges that 
these  countries  are  facing,  and  of  their
relevance  from  an  EU-wide 
perspective, it is key that the reforms recently enacted in these countries are 
successfully implemented, monitored, and followed by additional measures if 
necessary. 

The  momentum observed  in  a  number  of  Member  States  in  recent  years
towards policy action to keep participation rates high should also be kept. In 
countries with less pressing fiscal consolidation needs, tax reforms, possibly 
targeted, could create the conditions for better mobilising labour supply and 
demand.

There are growing signs of worsening labour market matching across Europe. 
To  prevent  joblessness  becoming  entrenched  and  jobseekers  leaving  the 
labour  force,  policy  frameworks  to  improve labour  market  matching  and 
maintain the long-term unemployed in the labour force need to be stepped up, 
and  adequate  resources  mobilised,  to  ensure  in  particular  that  the  scale  of 
activation programmes and the capacity of Public Employment Services are 
proportionate to the growing pool of unemployed. In the countries concerned 
by  high  youth  unemployment,  policies should  also  focus  on  easing  the
school-work  transition,  including  via  an  effective  use  of  apprenticeship 
systems.  To  promote  hiring  of  the  long-term  unemployed  or  the  youth, 
temporary social security cuts or job subsidy schemes for the new hires could 
be considered, provided they  are  well targeted and designed. These policies 
would help avoiding hysteresis effects once economic growth resumes.

Surging  unemployment  and  falling disposable incomes are  at  the  root  of 
growing poverty and social exclusion in some countries. The enhancement of 
income  support  systems  along  the  adequacy,  sustainability,  and  incentives 
dimension  would  help  tackling  the  social  consequences  of  the  crisis  and 
making  current  macroeconomic  and  structural  policy  strategies  politically 
sustainable. 

Part I
Labour market developments

1. GENERAL LABOUR MARKET CONDITIONS IN THE EURO

AREA AND THE EU

1.1. 

INTRODUCTION

Following  the  escalation  of  the  sovereign  debt
crisis in  the  euro  area,  uncertainty dominated  the
economic  outlook since  the  second  half  of  2011,
influencing 
consumption
decisions.  Output  growth  in most  EU  countries
decelerated, including in light of further headwinds
linked, inter-alia, to a slowing growth in emerging
economies. 

investments 

and 

Employment was hardly hit.  The  timid  recovery
started at mid-2011 was interrupted and job losses
prevailed.  Repercussions were  felt  not  only  in
terms  of  reduced  job  finding  rates,  but  also  in 
terms  of  a  renewed  process  of  job  shedding.
Unemployment  in  the  EU  as  a whole grew,  in
contrast with other world regions.

The  unemployment  rate  in  the  euro  area  is
currently at the highest level since the start of the
monetary union, and the degree of diversity in the
unemployment 
at
performance 
unprecedented levels. 

remains 

Against this background, this chapter analyses the
anatomy  of  the current labour  market  adjustment
by  looking  at  aggregate  developments  in the  EU
and the euro area. In doing so, it compares the EU
labour  market  performance with that  of  other
world  macro-regions  and  assesses  the  role  of
cyclical  and structural  factors  in unemployment
dynamics  and the  role  played  by  the  relevant
adjustment  margins,  including  working  hours  and
labour costs.

The  remainder  of  the  chapter  is  organised  as
follows.  The  next  section compares  aggregate
labour market  developments in the  euro  area  and
the  EU with  those  taking  place  in  other world
areas.  Section  1.3  analyses  employment  and
unemployment  dynamics, while
section  1.4 
reviews  latest  trends  in wages  and  labour  costs.
Section 1.5 focuses on salient aspects of European
unemployment,  analysing  job  market  flows,  long-
term  unemployment  and  labour market matching.
A concluding section follows.

6

1.2. 

SETTING  THE  SCENE:  THE  EU  LABOUR
INTERNATIONAL
AN 
MARKET 
PERSPECTIVE 

IN 

1.2.1. Recent EU-level developments

Immediately after the 2008 recession, employment
proved  particularly  resilient  in  the  EU, notably  in
light  of  a  prompt  adjustment  in working  hours
(European  Commission,  2010,  2011,  2011a).
However,  the  2010 EU recovery  turned  out  to  be 
short-lived, as the  sovereign  crisis  escalated  and
the economic outlook worsened.

The deceleration of GDP growth in the second half
of 2011 put a lid on an already hesitant process of
job  creation: employment growth  in  the EU  and
notably the euro-area  decelerated  in  the  second
half of 2011 while the timidly started decline in the
unemployment rate came to a halt (Table I.1.2). In 
fact,  the unemployment  rate kept  rising  at  a  fast
pace at the end of the year to reach in April 2012,
11  and 10%,  respectively,  in the  euro  area  and  in
the EU.

Table I.1.1: GDP growth and unemployment in selected

countries

GDP growth

Unemployment rate

2000-2007

2010

2011

2000-2007

2010

2011

EA17
EU
CAN
JPN
USA
OECD
BRIC:
BRA
RUS
IND
CHN

2.2
2.5
2.9
1.5
2.6
2.5
8.0
3.5
7.2
7.1
10.5

2.0
2.1
3.2
4.4
3.0
3.0
8.7
7.5
4.0
8.4
10.3

1.5
1.5
2.4
-0.7
1.7
1.6
6.9
2.7
4.3
6.9
9.2

8.6
8.6
6.9
4.7
5.0
6.4
:
11.1
8.1
:
3.9

10.2
9.7
8.0
5.1
9.6
8.3
:
6.8
7.5
:
4.1

10.2
9.7
7.5
4.6
9.0
8.0
:
6.0
6.6
:
:

Source: Eurostat and OECD.

The  number  of  unemployed in  April  2012 was
17.4 million for the euro area, almost 25 million in 
the  EU. The  number  of  job  losses  since  2008
amounts  to  about  5  million  for  the  EU;  3  million 
for the euro area. 

Although  the youth  unemployment  rate  (age  15-
24) for  the  overall  EU was increasing  relative  to
that  of  other  age groups until  2008  and  falling 
from January 2009, in some countries the number
of young unemployed  reached  recently  record
highs (see Chapter 2).

Labour market developments

Part I

Table I.1.2:

Unemployment, compensation per employee and GDP growth in the euro area and European Union
Quarter over quarter same year

Unemployment rate

Unemployment 
growth
Growth of nominal
compensation per
employee

GDP growth

Employment growth

2009
9.6
9.0
28.8
28.2
1.8

-0.9

-4.4
-4.4
-1.9
-1.8

2010
10.1
9.7
6.0
7.7
1.8

3.5

2.0
2.1
-0.4
-0.3

2011
10.2
9.7
1.6
0.6
2.2

2.2

1.5
1.5
0.1
0.2

2012
11.0
10.3
-0.9
-0.9
1.9

3.0

-0.3
0.0
-0.5
-0.2

EA
EU
EA
EU
EA

EU

EA
EU
EA
EU

Quarter over quarter of previous year
2011Q1
10.4
10.0
-0.9
-2.3
1.8

2011Q2
9.8
9.4
-1.4
-1.8
1.9

2011Q3
9.9
9.5
2.5
1.7
2.0

2011Q4
10.6
10.0
6.5
4.9
2.0

2012Q1
11.5
10.7
10.5
8.2
2.0

2011Q1
0.3
0.4
3.6
3.3
0.6

2011Q2
-0.6
-0.6
-5.7
-4.7
0.6

2011Q3
0.1
0.1
1.5
1.4
0.2

2011Q4
0.7
0.5
7.3
5.1
0.6

2012Q1
0.9
0.7
7.5
6.5
0.6

2.8

2.6
2.3
0.6
0.5

1.9

1.8
2.0
1.0
0.5

1.7

1.3
1.3
0.7
0.1

2.2

0.3
0.6
0.3
0.0

2.5

0.3
0.3
-0.6
-0.4

1.0

-3.1
-4.3
-0.2
-0.7

0.1

2.7
2.8
1.1
1.1

0.5

-0.6
-0.1
0.0
0.2

0.7

1.5
2.4
-0.5
-0.6

1.3

-3.2
-4.5
-1.2
-1.1

(1) The changes in unemployment rate are in pps; for the other variables the change are in per cent.
Source: Eurostat and DG ECFIN AMECO database.

Aggregate unemployment  data  conceals major
differences  at  country  level.  In  particular,  it  is
remarkable  the  large  and  rising  dispersion  of
unemployment rates within the euro area after the 
2008 recession,  which  is  expected to increase 
further until  2013,  according  to  the Commission 
Spring  Forecast  (Graph I.1.1).  A  large  fraction  of
the increase  in total  euro-area  unemployment  is
mainly driven by developments in a few countries,
notably in Spain. 

Graph I.1.1:

Employment and GDP growth in the EU

3
2
1
0
-1
-2
-3
-4
-5
-6

%

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

1
Q
1
1
0
2

1
Q
2
1
0
2

GDP growth EU27

Employment growth EU27

Source: Eurostat and DG ECFIN AMECO database.

Diverging labour market conditions since the 2008 
recession reflect not only the asymmetric effect of
the  crisis  (notably,  on  the banking  the housing
sector), but also different institutional settings and
policy  responses,  and  different  constraints for  the
financial sector and fiscal policy. 

in 

the 

In  particular,  the  different  need  for private  and
the
government  sector  deleveraging  explains 
protracted divergence 
labour market
performance.  Graph I.1.2 shows  that  employment
has  been  declining more  in  euro-area  countries
with  a  rapid  increase  in households'  indebtedness
financial
the  crisis. Highly-leveraged 
before 
systems are at the current juncture characterised by
higher  risk  premia  and  tigher  credit  conditions,

which  put  a  brake  on  domestic  demand  for
investment and consumption. (1)

Graph I.1.2:

Employment in high and low leverage
countries (2007=100)

100.0

97.5

95.0

92.5

90.0

2007

2008

2009

2010

2011

Countries with high leverage

Countries with low leverage

(1) Countries with high leverage include EU countries with
an increase between 2004 and 2007 of households' debt to
income ratio higher than the third quartile: Denmark,
Estonia, Ireland, Spain, Cyprus, Latvia and the Netherlands.
Source: Commission services.

Similarly,  Graph I.1.3 shows  that  employment
growth fell especially in those euro-area countries
having  carried  out more 
fiscal
substantial 
consolidation since the outburst of the crisis.

shows 

has  a 

evidence 

indeed 
significant 

that 
fiscal
The 
consolidation
impact  on
unemployment  (see  Box  I.1.1). This  impact  is
mostly temporary  and  in the  order of  0.1%
additional  unemployment  for  a  fiscal  impulse  of
1% of GDP.

(1) A  cross-section  regression  for  the  27 countries  between
employment  growth  during  the  period  2008-2011  and  the
percentage  point  change  in  the  household  debt  to  income
ratio  over  the  period  2004-2007  turns  out negative  and 
strong, implying that one standard deviation increase in the
change of debt income ratio before the crisis is associated
to a decline of employment growth since 2008 of 0.7%.

7

European Commission

Labour Market Developments in Europe, 2012

Box I.1.1: Assessing the impact of fiscal consolidation on unemployment

This box presents result from empirical analysis on the impact of fiscal policy on unemployment using an 
action-based  fiscal  consolidation  variable  (Devries  et  al,  2011),  which  have  the  double  advantage  of  not 
including  cyclical  elements  and  being  largely  exogenous  (available  for  the  period  1978-2009  for 13  EU 
countries). The impact of consolidations is assessed on cyclical unemployment (source: AMECO database), 
in light of its stationarity properties. The specification regression framework is an augmented AR2 model, 
which reproduces the broadly regular oscillations of cyclical unemployment around its mean (zero):

u

,
ti

=

α
u

−
1,
ti

+

β
u

,
ti

−

2

+

γ
FC

,
ti

+

εηθ
,
t
ti

+

+

i

(1)

where i, t denote country and year respectively, u is cyclical unemployment, FC is a consolidation variable, 
θ and  η are,  respectively,  country  and  year  fixed  effects,  while  ε is  a  standard  white-noise  error.  The 
unemployment  impact  multiplier  of  the  overall  budgetary  consolidation  variable  is  positive  but  not  large, 
amounting to less than 1/10 of a percentage point of unemployment for each  GDP point of consolidation. 
While the impact of government revenue is non-significant, that of government expenditure is negative and 
higher in absolute value and of a higher order of significance that that for the overall budget balance. The 
estimated  unemployment  impact  multipliers  are  broadly  in  line  with  existing  estimates  of  GDP  fiscal 
multipliers  (for  instance,  the  estimated  0.16  unemployment  multiplier  for  government  expenditure would 
imply a GDP fiscal multiplier of about 0.5 assuming a standard Okun coefficient of 0.3).

Due to the auto-regressive process of unemployment, the peak multiplier is above the impact multiplier, as 
the adjustment of unemployment to the fiscal shock takes time. As shown in the graph above, the peak effect 
materializes  after  one  year  (reaching  almost  0.1  per  cent  for  the  overall  budget  and  about  -0.18  for 
expenditure cuts) and effects decay to zero with oscillations after about 5 years.

8

Labour market developments

Part I

labour  supply  and  the  importance  of  sectoral
reallocation and 
the  matching
efficiency of labour (see next sections).

its  effects  on 

to 

services,  education  and 

In  the  US,  employment  growth accelerated  while
unemployment  continued 
trend  downward,
albeit  from historically high  levels. Employment
growth was  supported  by  job  creation  in the
service-providing industries (e.g., professional and
business
leisure  and
hospitality) while  it was  sluggish  in  the  goods
producing industries  (in  particular  construction).
As  opposed  to  Europe,  in  the  US a  proportion  of
the  population  exited  the  labour  force  as  a
consequence  of  the  crisis:  as  of  May  2012 the
participation rate of the population above 15 years
in  the  US is  at  63.8%,  the  lowest  rate  since  the
early 1980s. (3)

Graph I.1.4: Unemployment rates in the EU and the US

12

10

%

8

6

4

7
0
0
2
-
n
a
J

United States
Euro-area
EU
G7

7
0
0
2
-
t
c
O

8
0
0
2
-
l
u
J

9
0
0
2
-
r
p
A

0
1
0
2
-
n
a
J

0
1
0
2
-
t
c
O

1
1
0
2
-
l
u
J

2
1
0
2
-
r
p
A

Source: OECD.

Nonetheless, substantial budgetary cuts, protracted
over a number of years as in the case of few euro-
area countries, could by themselves explain a quite
relevant fraction  of  the  increased  unemployment
since the crisis.

Graph I.1.3:

Employment and fiscal consolidation
(2007=100)

100.0

97.5

95.0

92.5

90.0

2007

2008

2009

2010

2011

Countries with high change in the CAB
Countries with low change in the CAB

(1) Countries with strong consolidation include EU countries
with a cumulated change in the structural deficit since 2011
above the third quartile:  Greece, Spain, Latvia, Lithuania,
Poland, Portugal and Romania.
Source: Commission Services.

1.2.2. Recent  labour market  developments  in 

major world regions

outlook 

remains weak 

Four years  after  the  Great Recession, the  labour
in  most
market 
industrialised  countries.  However,  while  between
2010 and 2011 the unemployment rate fell in most
major  world  macro-regions, this was  not  the  case
for  the  EU.  In  2011,  the  euro  area  was  the  world
region with the highest unemployment rate (Table
I.1.1).

in 

second  half  of  2011,  unemployment
Since
developments 
industrialised  countries have
started  to  diverge,  mainly  as  a  consequence  of  a
more  sustained  recovery  in  the  US  and  Canada
compared  with  the  EU  and  Japan  (Graph I.1.4). 
Sovereign  debt  concerns  in  the  EU,  the  different
stage  of  debt  deleveraging,  access  to  credit  and
developments  of  consumers'  confidence  partly
explain  the  uneven  cyclical positions  across  the
two sides of the Atlantic. (2) Other relevant factors
comprise  the  extent  of  adjustment  of working 
hours  at  the  beginning  of  the  recession  which
the  EU,
delayed 
different responses of real wages, the behaviour of

labour market  response 

in 

(2) E.g., OECD (2012).

flooding 

the  November 

In  Japan,  GDP growth 
turned  out negative
following  weak  external  demand  and  the  supply
chain  disruptions  related  to  the  March  2011
earthquake  and 
in 
Thailand.  The  mild  decline in  employment  that
followed  the  contraction  in  economic  activity
coincided with a drop in labour productivity, after
a  sizeable  increase  of  2010.  Conversely,  in many
industrialised  countries, most  notably
other 
Zealand, 
Canada,  Australia, 
unemployment 
the  pre-crisis
average in spite of the recovery.

remains  above 

and  New

(3) Participation  was  flat-to-rising during  the  1973-75,  1981-
82, and  1990-91  recessions. This  pattern  is  driven  by
falling participation of married and highly educated women 
during expansions (Albanesi and Prados, 2012).

9

European Commission

Labour Market Developments in Europe, 2012

Graph I.1.5: Unemployment rate in the euro area and the United States: actual and Okun law predictions

actual

predicted

United States 

actual

Euro area 

predicted

12

11

10

9

8

7

6

5

4

3

2

12

11

10

9

8

7

6

5

4

3

2

 01Q2

 02Q4

 04Q2

 05Q4

 07Q2

 08Q4

 10Q2

 11Q4

 01Q2

 02Q4

 04Q2

 05Q4

 07Q2

 08Q4

 10Q2

 11Q4

(1) Predicted unemployment rate is an out of sample prediction of an Okun's law estimate on the period starting with 1996q1
and ending with the last quarter of before the start of the recession. For the euro area (United States), 68% (43%) of the 
change in unemployment is explained by contemporaneous changes in GDP.
Source: Commission Services.

Looking  at  developments  in real wages,  there  is
evidence  of  different  adjustment  patterns  across
the most advanced economies (Graph I.1.6). In the
euro  area,  while  the  productivity  decline  of  2008-
2009 was accompanied by a limited adjustment of
real wages, in 2011 real wages were broadly in line
with  productivity  developments.  In  the  United
States, relatively stable real wages were associated
with sluggish job creation amid strong recovery of
productivity  growth. 
limited
In 
adjustment  in  head-count  employment  during  the
2011  contraction  coincided  with  a  substantial
increase in real wages, mostly attributable to price 
deflation. Conversely,  in Canada,  in  spite  of
productivity 
declined
substantially, eroded by inflation.

Japan, 

wages 

gains, 

real

the 

Graph I.1.6: Real wages and productivity growth in the

euro area and selected advanced countries

Canada

Switzerland

Euro area

United States

Japan

Canada

Switzerland

Euro area

United States

Japan

2010

2011

-2

-1

0

Real wages

1
2
Productivity

3

4

5

Source: DG ECFIN AMECO database.

1.3. 

EMPLOYMENT AND UNEMPLOYMENT

Employment expansion  lost  pace  in  the  second half
of  2011.  In spite  of  the  economic  recovery  in the
export  oriented  industries driven  by the  strong 

10

dynamics  of  global growth  in  the  first  half  of  the
year,  the  demand  for  labour  in  these  industries
continued to be lacklustre. Employment expanded 
at  a  moderate  pace in  manufacturing and  more
strongly  in wholesale  and  retail  trade;  for  a  third
year 
in
in  a  row, 
construction (Table I.1.3).

job destruction  prevailed 

Table I.1.3:

Employment and value added in sectors

2000-2007

2009 2010 2011

Employment growth

All NACE activities
Industry (except construction)
Manufacturing
Construction
Wholesale, retail trade; hotels and restaurants; 
Financial intermediation; real estate
Public administration, community services; activities of 
households
Services

1.0
-0.8
-0.7
2.2
1.4
3.2

-1.8
-5.7
-6.3
-5.4
-1.7
0.1

-0.5
-3.2
-3.5
-4.1
-0.6
-1.4

0.2
0.3
0.2
-3.0
0.5
0.0

1.4

1.6

1.0

-0.3

-0.1

1.3
Value added growth

0.1

All NACE activities
Industry (except construction)
Manufacturing
Construction
Wholesale, retail trade; hotels and restaurants; 
Financial intermediation; real estate
Public administration, community services; activities of 
households
Services

2.3
-4.3
2.0 -12.1
2.3 -14.3
-7.7
1.9
-5.7
2.5
1.1
3.9

1.5

1.7

2.3

-1.7

2.1
6.5
7.6
-2.1
2.4
-0.5

0.9

1.3

Source: Eurostat.

0.1

1.6
3.2
4.7
0.3
1.9
-0.3

0.7

1.1

How  the  jobless  rate  has responded  to GDP
developments in 2011 can be gauged from Okun's
law estimates, linking the percentage point shift in
the  unemployment  rate to the  percentage  point
change in output.

After  a  limited  response  of unemployment  in
2008-2009, departures from the Okun law in 2010-
2011  were  small  relative  to  changes  in  the 
observed unemployment (Graph I.1.5).

Labour market developments

Part I

Box I.1.2: The impact of uncertainty on unemployment

It  could  be  expected  that  an  uncertain  environment  leads not  only  to  delay not  only investment, but  also
hiring, having this way both a direct effect on employment and an indirect one, via economic activity. The
present analysis develops a VAR model aimed at isolating and measuring these effects.

Uncertainty is measured by the index developed in Baker et al. (2012, 2012a) for the EU aggregate and the
US. The index is obtained by combining information on the frequency of newspapers articles that containing
the terms uncertain or uncertainty and the terms economic or economy and policy relevant words such as
taxes, policy, spending, regulation etc. 

The dynamic interactions between uncertainty, GDP and the unemployment rate are captured fitting a VAR
over the period 1996Q1-2011Q4 separately for the euro area aggregate and the US. Shocks are identified by
means of a Cholesky decomposition imposing that uncertainty is a forward-looking variable. For the euro
area,  a  VAR  has  been  fit also  on  uncertainty, GDP,  the job  finding  and  separation  rates over  the  same
period. The charts below depict the impulse responses to output and uncertainty shocks. 

The main findings are as follows: 

• Unemployment  responds  both  to  GDP  and  uncertainty  shocks.  This  means  that falling  GDP  coupled
with much increased uncertainty implies unemployment rising more than predicted by a standard Okun
relation. Following a one standard deviation shock to uncertainty, unemployment rate rises for 2 years
before reverting back to the pre-shock level.

•

In  line  with  existing evidence  (e.g., OECD, 2012),  the  response  of  unemployment  to  a GDP  shock  is
stronger  in  the  U.S.  than  in  the  euro  area. The  response  of  unemployment  to  an  uncertainty  shock  is
stronger and more rapid in the U.S. than in the euro area.

• GDP shocks account for about 60% of the variability of unemployment in the euro area; after one year
uncertainty shocks account for 30% of unemployment fluctuations. Shocks to uncertainty account for a
larger proportion of unemployment changes in the U.S. than in the euro area. Shock to GDP account for
less than 50% of unemployment variability in the euro area.

• The  response  of  the  separation  rate  and  job  finding  rate  to  a  transitory GDP  shock  are  of  the  same
magnitude as the responses to a shock to uncertainty. Within a one-year horizon, shocks to GDP account
for  50%  of fluctuations  of  the  separation  rates,  while  shocks  to  uncertainty  account  for  about  30% of 
overall fluctuations of the separation rate; shocks to GDP and uncertainty account for about 40% of total
variability of the job finding rate.

Unemployment response to GDP and uncertainty shocks: euro area, US

Response of unemployment to a on S.D. shock to uncertainty

EU

US

0.4

0.3

0.2

0.1

0

1

3

5

7

9

11

13

19
quarters following the shock

17

15

0.4

0.3

0.2

0.1

0

-0.1

-0.2

-0.3

-0.4

Response of unemployment to a on S.D. shock to GDP

EU

US

1

3

5

7

9

11

13

15

17

19

quarters following the shock

(Continued on the next page)

11

European Commission

Labour Market Developments in Europe, 2012

Box (continued)

Response of job finding and job separation rates to GDP and to uncertainty, euro area

Response of separation rate to a s.d. shock to 

Response of finding rate to a s.d. shock to 

log GDP

log uncertainty

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

log GDP

log uncertainty

0.0

-0.1

-0.2

-0.3

0.04

0.03

0.02

0.01

0

-0.01

is  explained well  by

For the euro area the state of the labour market in
historical 
2011 
relationship  between  economic  activity
and
unemployment. This  contrasts with  developments
in the United States, where, from the end of 2008 
through all 2009, unemployment was considerably
higher than what implied by Okun's law. (4) 

the

Different  factors  may influence  the  changing
response of unemployment to economic activity.

Graph I.1.7: United States cumulative decline in GDP,

number of employees and average hours
worked per employee

1

0

-1

-2

-3

-4

-5

-6

-7

-8

4
Q
7
0
0
2

1
Q
8
0
0
2

2
Q
8
0
0
2

3
Q
8
0
0
2

4
Q
8
0
0
2

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

4
Q
0
1
0
2

1
Q
1
1
0
2

2
Q
1
1
0
2

3
Q
1
1
0
2

4
Q
1
1
0
2

1
Q
2
1
0
2

US - GDP

US - Hours per worker

US - Employees

Source: Eurostat, U.S. Department of Labour.

First,  unemployment may  be  less  responsive  to
GDP  growth  due  to adjustment of  working  hours
(at  the intensive  margin).  Graph I.1.7 and I.1.8
show  that  the US  and  the  euro  area  experienced
different adjustment patterns in the components of
the labour input during the recent cyclical phase. 

Graph I.1.8:

Euro-area cumulative decline in GDP, number
of employees and average hours worked per
employee

2
1
0
-1
-2
-3
-4
-5
-6
-7
-8

1
Q
8
0
0
2

2
Q
8
0
0
2

3
Q
8
0
0
2

4
Q
8
0
0
2

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

4
Q
0
1
0
2

1
Q
1
1
0
2

2
Q
1
1
0
2

3
Q
1
1
0
2

4
Q
1
1
0
2

1
Q
2
1
0
2

EA17 - GDP

EA17 - Hours per worker

EA17 - Employees

Source: Eurostat, National Accounts.

The decline in head-count employment was milder
during the recession in the euro area, while in the
United  States  the  labour market  adjustment  took
place  largely  at the "extensive  margin"  (i.e.  the
hours per worker declined more than employment
in the euro area relative to the US). Currently, the
margin for  a  downward  adjustment  of working 
hours  to  cater for  a temporary  output  loss  appear
lower in the EU, as the average hours worked have
stabilised  at  a  level  below  that  prevailing  in  the
pre-crisis period.

The second element that may explain the sluggish
employment growth  in  the  euro  area  is  related  to
heightened  uncertainty,  notably  linked  to  the
sovereign-debt  crisis  on  its implications  on the
banking  sector. (5)  After  improving  until  the first

(4) See  OECD (2012),  Bernanke  (2012), and  Elsby  et  al.
(2011). A decline in unemployment stronger than predicted
by Okun's law is typical of recent US expansions.

(5) Other events increasing the uncertainty about the economic
policy environment were the public finance concerns in the
US, the disruption of the supply chains after the flooding in 
Thailand, the increases in the oil prices and the geopolitical

12

Labour market developments

Part I

the 

resilient 

workers,  in  line with  pre-crisis  trends;  falling
participation  for young  adults.  (7) Overall,  the
interpretation  of 
force
participation in the EU immediately after the crisis
is  linked  to  the  so-called  "added  worker  effect", 
namely,  increased  activity notably  by  second
earners  to  cope  with  reduced  income  household
income  prospects  (European  Commission,  2011,
2011a).

labour

1.4.  WAGES AND LABOUR COSTS

Expectations about the incoming recovery in 2010
were followed  in  2011  by  a moderate  pick  up  of
negotiated  wages in  the  euro  area,  which  were
expanding on an annual basis at 2% (against 1.7%
of  the  previous year).  However,  persistent  labour
market  slack was  already  incorporated  in  the  first
quarter  of  2012  in  the  dynamics  of  the variable
components  of wages, which  almost  offset  the
moderate  increase  stipulated  by  the  collective
bargaining agreements.

Graph I.1.10: Phillips curve for the euro area 2000-2011:
growth of negotiated wages

Increased  uncertainty 

quarter  of  2011,  EU  business  and  consumer
confidence  have  been  substantially  weakening
since  April.  Facing  a  more  uncertain  outlook  and
sluggish  economic growth,  businesses  may  have
been more reluctant to hire and more prone to shed
jobs. (6)
helps
explaining the increased sensitivity of employment
dynamics to output deceleration in 2011. As shown 
in Box I.1.2, uncertainty shocks impact not only on 
output  but  directly  to  employment  decisions, with
a  deterioration  of  both  the  job  finding  and
separation rates and a rather persistent increase in
unemployment.

further

to

third 

factor  affecting the

economic  activity is

reaction  of
The 
unemployment
the
behaviour  of labour force  participation.  Activity
rates  in  Europe were  generally highly  resilient
during  the  recession  (chapter  2).  As  shown  in 
Graph I.1.9, during  2008-2010 the  proportion  of
active working-age  population increased,  and
remained mainly unchanged in 2011.

Graph I.1.9:

Employment, unemployment and
participation rates in the EU and the euro area

72

67

62

57

52

Total

Women

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

13

12

11

10

9

8

7

6

)
h
t
w
o
r
g

l

a
u
n
n
a
(

s
e
g
a
w
d
e
t
a
i
t
o
g
e
N

4

3

2

1

0

linear trend 
2000-2008

2009

2011

2010

Employment rate - total
Activity rate - total
Unemployment rate - total (right scale)

Employment rate - women
Activity rate - women
Unemployment rate - women (right scale)

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

Source: Commission Services.

Unemployment rate

Source: Eurostat, LFS.

This  development 
some  extent
reflects
composition  effects: a  steep  increase  in female
participation  (with  a  broadly unchanged male
participation);  a  growing  participation  by older

to 

tensions in  the  middle-east;  see  European  Commission
(2012), Spring Forecast.

(6) The  uncertainty  on  the  resolution  of  the  sovereign  debt
crisis and its effects on the cost of private capital may have 
curbed hiring intentions worsening labour market prospects
with  negative  feedbacks  on  short-term  interest  rates, 
economic prospects  and  solvency  risks  (Manasse and 
Trigilia, 2011).

For  the  euro  area  as  a  whole,  the  labour market
weakness has been only  gradually incorporated in 
collectively agreed wages, as shown by the Phillips
curve  based  on  the  period  2000-2008  period
(Graph I.1.10):  the  increase  in  unemployment
after  the  2008  recession was followed  by  a
deceleration  of  negotiated wages with  lags,  and
only starting from 2010 and 2011 the dynamics of
negotiated wages  are  broadly  in  line  with what

(7)

In 2011 the US participation rate dropped by ½ p.p. Among 
various age groups, participation is increasing only among 
the young adults (20-24).

13

 
 
 
European Commission

Labour Market Developments in Europe, 2012

predicted  on  the  basis  of the  Phillips  curve-type
relation.

The  dampening  effect  of unemployment  on wage
growth was instead fully reflected already in 2009
when measured  in  terms  of  compensation  per
employee,  which  include  the  variable  component
security
employers'
of wages 
social 
contributions 
I.1.11).  This  evidence
suggests that  the variable  component  of wages
adjusted  faster  to  labour market  slack  than the
negotiated component.

(Graph 

and 

Graph I.1.11: Phillips curve of the euro area 2000-2011:

growth of compensation per employee

Graph  I.1.5 (panel  b)  shows  that  until  2009  real 
wage dynamics were actually stronger in countries
with worse unemployment outcomes, and that this
pattern has inverted only in 2010.

As for  developments  in  productivity  and unit
labour  costs,  the  slowdown  of  labour  productivity 
growth in 2011 combined with unchanged growth
of compensation per employee implies a recovery
in unit labour costs in the EU and in the euro area
(Graph I.1.12). These  developments  compensate
partly for the opposite trend observed in 2008 and
2009, caused by widespread labour hoarding.

Graph I.1.12: Compensation per employee and unit labour

costs in the euro area

4

3

2

1

0

l

l

a
u
n
n
a
(
e
e
y
o
p
m
e
r
e
p
n
o
i
t
a
s
n
e
p
m
o
C

)
h
t
w
o
r
g

Linear trend 
2000-2008

2011

2009

2010

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

5

4

3

2

1

0

-1

-2

-3

Source: Commission Services.

Unemployment rate

The reading of dynamics in aggregate wage figures
needs  also  to  take  into  account  of  the  changing
composition  of  employment  by 
skill.  The
substantial  decline  in  low-skilled  employment
since the  crisis may  partly  explain the  lags  in  the
wage  response  to  increased  unemployment  in  the 
euro  area  and may  indicate  that,  taking  into
account  composition  effects,  the  actual wage
response  is stronger  than  revealed  by  referring  to
unadjusted aggregate figures.

Regarding  euro-area  dynamics  in  real  product
wages  (i.e.  nominal  compensations  per employee 
deflated with product prices; the definition of real
wage  relevant  for  firms'  hiring  decisions),  it
appears  that  they may have  somehow  contributed
to  accommodate  the  slack  in  the  labour market.
real
After growing  at  1.4% 
compensation per  employee  based  on  the  GDP
deflator decelerated to 0.9% in 2009-2011.

in  2008, 

the 

importantly, 

looking  at  cross-country 
More 
patterns,  it  appears  that  real wage  adjustment  is
increasingly linked to labour market slack. In fact,

14

1997

1999

2001

2003

2005

2007

2009

2011

2013

Compensation per employee
Nominal unit labour costs

Productivity (inverted sign)

(1) For 2012 and 2013 Commission Spring forecast.
Source: DG ECFIN AMECO database.

the 

limited wage 

The dynamics of real labour costs mirrors changes
in the wage share and in its complement the profit
share.  Between  2007  and  2009,  labour  hoarding 
and 
adjustment were
accompanied  by  an  increase  in  the  labour share. 
With  adjustment  of wages taking  place,  and with
limited  room  for  labour  hoarding  opportunities  in 
countries where  hours worked  remain  below  the 
pre-crisis average, the wage share started to revert
towards  its  pre-crisis  level.  In  2011  the  average
profit  share  in  the  EU  stood  at  about  57%,  well
above the share prevailing before the crisis (55%).
In spite of this recovery in the profit share and its
implications for  the  availability  of  internal  funds,
investment  has  not resumed  due  to  substantial
uncertainty on demand prospects.

The fact that the largest increase in compensations
per  employee  was  recorded  in manufacturing
reflects the shift in the composition of employment
towards higher wage  categories  as well  as  the
recovery of the export sector (Table I.1.4). Despite

 
 
Labour market developments

Part I

Table I.1.4:

Labour costs by sector

Compensation per employee
2009
2011
2010

2009

Value added
2010

2011

          Total hours worked

          Unit Labour Costs

2009

2010

2011

2009

2010

2011

Total Economy

EU27
Euro-area 
US
Japan
Canada

-0.9
1.8
2.1
-3.8
1.5

Industry (except construction)

EU27
Euro-area 
US

Manufacturing 

EU27
Euro-area 
US

Construction

EU27
Euro-area 
US

-2.4
-2.2
3.4

-3.0
-2.6
3.6

0.5
4.4
3.5

3.5
1.8
2.7
0.2
2.6

5.6
3.7
2.7

5.5
3.8
2.9

3.8
1.1
1.8

2.2
2.2
3.2
1.0
3.2

3.1
3.0
:

3.1
3.1
:

2.4
3.0
:

-4.3
-4.4
-2.6
-7.5
-3.1

-12.1
-13.2
-5.5

-14.3
-15.7
-9.2

-7.7
-6.9
-15.8

2.1
2.1
3.0
4.5
3.2

6.5
6.7
:

7.6
7.6
:

-2.1
-4.2
:

Wholesale and retail trade, transport, accomodation and food service activities

EU27
Euro-area 
US

-1.7
-0.1
1.3

3.1
1.7
2.3

Financial and insurance activities

EU27
Euro-area 
US

-0.3
0.2
0.9

4.9
2.0
3.8

2.0
1.7
:

2.1
1.2
:

-5.7
-5.7
-2.9

1.1
3.9
-1.2

2.4
2.6
:

-0.5
1.3
:

1.6
1.5
1.7
-0.7
2.2

3.2
3.4
:

4.7
4.6
:

0.3
-1.0
:

1.9
2.0
:

-0.3
0.5
:

-3.1
-1.9
-5.5
-4.7
-3.3

-8.2
-6.9

-9.0
-7.8

-7.2
-7.7

-2.4
-0.9

-1.4
-0.3

-0.1
0.2
0.0
0.7
1.9

-1.0
-0.5

-1.1
-0.6

-4.0
-4.4

0.1
-0.3

-0.9
-0.7

0.5
1.0
:
:
:

0.9
1.6

1.0
1.8

-2.6
-3.6

0.7
1.3

0.5
0.7

1.6
4.2
0.5
0.4
2.8

4.6
8.7
-1.9

6.1
10.9
0.9

3.1
5.7
-0.2

2.5
5.3
3.3

-1.3
-2.7
-3.5

0.7
-0.9
-0.9
-4.4
0.8

-4.0
-5.9
-6.0

-5.4
-6.8
-8.3

1.7
1.6
-1.5

0.1
-1.5
-4.2

4.0
-0.3
2.3

0.8
0.8
2.0
1.5
2.4

0.2
-0.1

-1.3
-1.1

-0.9
0.2

0.7
0.5

2.4
0.8

(1) Unit Labour Cost data by sector for the EU and EA are own calculations.
Source: Eurostat, DG ECFIN AMECO database, OECD, Bureau of Labour Statistics.

the  increase  in  compensation  per  employee,  unit
labour costs continued through 2011 the downward
path  started  in  2010  owing  to  productivity  gains
linked  to  labour  inputs  growing  at  a  slower  pace
compared  with  value  added. In  construction, a 
recovery in unit labour costs was visible in 2011 in 
non-euro-area  countries,  linked  to  an incipient
recovery  in  value  added.  Conversely,  in  market
services,  notably financial  services, unit  labour
costs  have  been  rising  on  aggregate  amid  a 
deceleration of value added compared with 2010.

Graph I.1.13: Euro area competitiveness indicators

evident from  the  evolution  of  the  competitiveness
indicators  based  on  unit
labour  costs  (Graph
I.1.13).

1.5. 

LABOUR MARKET MATCHING AND LONG-
TERM UNEMPLOYMENT

job  creation  and 

Unemployment  dynamics  are  the  result  of  a
job
continuous  process  of 
separation.  The  separate  analysis  of  job  flows
helps  assessing  the underlying factors  driving  the
evolution  of unemployment  and  its  characterstics,
notably in terms of duration.

140

130

120

110

100

90

80

4
9
9
1

5
9
9
1

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

REER based on unit labour costs in total economy

REER based on unit labour costs in manufacturing

(1) Real effective exchange rates against 36 trading
partners.
Source: Commission Services.

For the EU and the euro area, these developments
have  led  to  an  evolution  of  relative  unit  labour
costs consistent with a gradual improvement of the
competitiveness  of  export-oriented sectors as  also

for 

job 

rates

finding

Graph I.1.14 shows the evolution of job separation
and 
the  euro  area 
aggregate. The  job  finding rate dropped  in  2009,
remaining  persistently  low  in  2010  and  declining 
further  in  2011, contributing  in  this way  to  a
growing  unemployment  rate  and an  increased
duration. (8) Less obviously, the weakening of the
labour market in 2011 did not manifest itself only
in  reduced  job  openings,  but  also  in  a  renewed 
process of job shedding. After the substantial drop
in separation rates from the peak of early 2009, job
separation  rates are  rising  again  starting  from
2011. As discussed in Chapter 2, this new process
of job destruction is concentrated in few countries.

(8) See Arpaia and Curci (2010) for the methodology.

15

European Commission

Labour Market Developments in Europe, 2012

Graph I.1.14: Job finding and job separation rates in the

euro area

13

11

9

7

5

%

%

1.0

0.8

0.6

0.4

0.2

0.0

2001Q1

2004Q1

2006Q1

2008Q1

2010Q1

2011Q4

Job finding rate

Unemployment rate

Job separation rate (rhs)

Source: Commission Services based on Eurostat data.

The deterioration of the job finding rate is common 
at all unemployment durations (Graph I.1.15). This
is indicative that the main driver of the reduced job
creation  is mostly  a shortfall  of  labour  demand,
because  in  the  opposite  case  of  structural  factors
playing  a major  role,  the  job  finding  probability
would  have fallen mostly  for 
long-term 
unemployed. (9)

the 

Graph I.1.15: Job finding rate by duration of unemployment, 

euro area

%

12

10

8

6

4
1996Q1

1998Q2

2000Q3

2002Q4

2005Q1

2007Q2

2009Q3

2011Q4

Less than one month

Between 3 and 6 months

Between 6 and 12 months

More than 12 months

Source: Commission services on Eurostat data.

Looking forward,  there  are risks  that  persistently
high  unemployment  rates would  also  imply  that
unemployment will  become  increasingly  of  a
structural  nature.  As low  rates  of  job  creation
persist, a growing share of unemployment will be
fall on long  durations. At  the  onset  of  the  crisis,
about 3% of the labour force was looking for a job
for more  than  12  months  (Graph  I.1.16).  After  an

(9) Similar evidence is found for the US; see: Bernanke (2012)

16

initial  fall  in  this  ratio  linked  to job  shedding,  the
ratio has continuously kept rising in the euro area 
and EU. (10) 

Graph I.1.16: Percentage of the labour force jobless for 1

year or more

6

5

4

3

2

1

0

%

1
q
5
0
0
2

1
q
6
0
0
2

1
q
7
0
0
2

EU

1
q
8
0
0
2

1
q
9
0
0
2

1
q
0
1
0
2

1
q
1
1
0
2

4
q
1
1
0
2

2
q
2
1
0
2

Euro area

US

Source: Eurostat and BLS.

in Graph  I.1.15,

Since, as  shown 
long-term
unemployed are less likely to find easily a job (due,
inter  alia, loss  of skill,  stigma,  or  reduced  search
effort)  the  increased  unemployment duration will 
contribute to a worsened matching process, thereby
keeping  job  finding  rates low and  unemployment
persistently high.

The  composition  of unemployment  by  duration is
not the only factor affecting matching in the labour
market. A broad assessment of the efficiency of the 
matching  process  can  be  gauged  by  the  Beveridge
curve, putting  in  relation  unemployment  and  job
vacancies. Movements  along 
the  curve  are
associated to changing labour demand; shifts of the
curve are related to changes in the efficiency of the
matching process. 

Graph  I.1.17 shows that  the  euro-area  Beveridge
curve  is  negatively  sloped  as  expected.  It  also
reveals two  prominent  inward  shifts  occurring  in 
the  late  1990s  and at mid-2000s, which  are
suggestive  of  improvements in  the  efficiency  of
the  matching process.  The  curve  also  reveals that
the crisis led first to a major drop in labour demand 
without major consequences in terms of matching 
until  2010  (compare  2008q1 with  the  2010q1  and 

(10) This tendency contrasts that in the US: after an initial surge
in the share of long-term unemployment in 2008, the ratio
has been falling since 2010, reflecting mostly a turnaround 
in job finding rates.

Labour market developments

Part I

Graph I.1.18: Shifts in the euro-area Beveridge curve and

NAWRU (cumulated changes since 1996)

e
t
a
r

l

t
n
e
m
y
o
p
m
e
n
u
n

i

e
g
n
a
h
C

0.5

0.3

0.1

-0.1

)
s
p
p
(

-0.3

-0.5

-0.7

-0.9

-1.1

1996

2000

2004

2008

2010

2012

Estimated shifts in the Beveridge curve

NAWRU

(1) For 2012 the shift refer to first quarter, NAWRU to 2012 
Spring forecasts.
Source: Commission services.

As shown in Graph I.1.18, the two curves exhibit a
remarkable  degree  of  co-movement, which  is
particularly  evident  in  recent  years. Until  2008,
both  series  points  toward declining  structural
unemployment. After  2008,  the  NAWRU  and  the
mismatch-related 
up
considerably.  This  evidence suggests  that,  if not
the  worsening  labour  mismatch  may
reversed,
imply that a structural and long-lasting increase of
unemployment.

unemployment

shot 

1.6.  CONCLUSIONS

The  EU  labour  market  in  2011  was marked  by  a
sudden  interruption  of  the  timid  recovery in
employment.  Employment  started  falling  in  the
mid of 2011 amid a reduction of job finding rates
and  a  renewed  process  of  job  shedding.  The  EU 
was 
region  where
unemployment did not fall in 2011. The euro-area
unemployment  rate  is  currently  close  to  11%, the
highest rate since the start of monetary union, and
unemployment  divergences  have  reached  a  record
high.

the  only  world macro 

The  labour market  weakness  was  mostly  the
results  of worsening  economic  activity linked  to
the  deterioration  of  the  sovereign  crisis.  The
reduced  room  for  adjusting working  hours, which

the  other green  square  labels),  and  then  a  gradual
deterioration  in  the matching  process.  In  the first
quarter of 2012, the combination of unemployment
and  vacancies  lies well  above  the  historical
relation.

Graph I.1.17: Beveridge curve for the euro-area, 1995q1-

2011q1

i

s
e
c
n
a
c
a
V

12

10

8

6

4

2

0

2001Q1

2008Q1

2007Q1

2002Q1

2000Q1

2011Q1

2012Q1

2006Q1

2003Q1

2004Q1
2005Q1

1999Q1

1998Q1

1995Q1
1996Q1

1997Q1

2010Q1

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

Unemployment rate

(1) Job vacancies are approximated with the survey based
indicator of labour shortages.
Source: Commission Services.

The  recent movements  in  the  Beveridge  curve
point  to  a  possible substantial  deterioration  in  the
matching  process  in  the  euro-area  labour market. 
However, this interpretation is subject to a number
of  caveats.  First,  movements  of vacancies  and
unemployment  can  be  a  sign  of frictions  in  the
adjustment  of 
than  a
rather 
deterioration  of 
labour market matching 
process  (e.g.  Blanchard  and  Diamond,  1989).
Second, movements  in  the unemployment  rate  do
not  account for  labour market  slackness  resulting 
into  workers  dropping  from the  labour  force.
Finally,  vacancies  and unemployment may  co-
linked  to  matching 
move  due  to  factors  not
efficiency (e.g., wage setting conditions,…).

labour
the 

input 

shifts 

Shifts in the Beveridge curve may be temporary or
may signal instead a long-lasting transformation in
the labour market. The extent to which Beveridge
curve 
permanent
transformations  in  the  labour market  can  be
gauged  by comparing  the shifts  in  the  location  of
the  curve,  representing  changes  in  unemployment
rate  due  to  changes in match  efficiency,  and  the
NAWRU. (11)

linked 

are 

to 

(11) The Graph is based on an estimate of a Beveridge curve for 
the euro area on the period 1996Q1-2011Q4 with constant
equal to  3.9  and  the  coefficient of  the  vacancies squared

that equals -0.13 both significant at 99%; R2=0.99. For the
methodology  and  a  review  of  the Beveridge  curve  see
"Labour  market  developments  in  Europe"  report  of last
year. 

17

 
 
 
 
European Commission

Labour Market Developments in Europe, 2012

have stabilised at a level below the one prevailing 
before  the  crisis,  and  the  increased  uncertainty  on 
the economic outlook  hampering labour  hoarding, 
further contributed to a response of employment to 
the  deceleration  of  economic  activity  that  was 
much  stronger  compared  with  the  onset  of  the 
crisis, albeit in line with Okun's law estimates. 

The evidence indicates that the persistence of high 
unemployment  rates  is  creating  the  conditions  for 
unemployment becoming increasingly structural in 
the euro area. The share of long-term unemployed 
has  risen  continuously  since  2009. The  Beveridge 
curve  for  the  euro  area  has  clearly  been  shifting 
outward  since  2010,  an  indication  of  worsening 
labour market matching.  

Dynamics  in  negotiated  wages  remained  fairly 
moderate  in  2011  and  unit  labour  costs  improved 
as  a  result  of  productivity  gains. Moreover, 
aggregate  data  on  wage  dynamics  may  mask 
composition  effects  linked  to  a  falling  share  of 
low-skilled  employment  which, 
into 
account,  would  reveal  a  more  substantial  wage 
adjustment.  In  light  of  the  lagged  response  of 
bargained  wages  and  the  slackness  in  the  labour 
market of 2011, sustained wage moderation might 
be expected looking forward. Most importantly, as 
stressed  in  the  next  chapters,  wage  dynamics  at 
reflecting 
country 
differences  in  unemployment  performance  and 
external rebalancing needs.

increasingly 

started 

taken 

level 

if 

18

2.

LABOUR MARKET DEVELOPMENTS AT COUNTRY LEVEL

2.1. 

INTRODUCTION 

Labour  market  developments  at  country  level 
followed  diversified  paths  in  2011.  Employment 
growth  was  strong  in  the  countries  with  the 
economic  recovery  on  more  stable  footings  (the 
the  Benelux,  Austria, 
Baltics,  Germany  and 
Hungary,  Poland  and  Sweden).  Conversely, 
employment  sharply  declined  in  Member  States 
with  falling  or  stagnating  GDP  such  as  Greece, 
Slovenia,  Ireland,  Spain  or  Portugal.  Also  in 
Romania,  and  especially  Bulgaria,  employment 
shrunk  despite  the  upswing  in  economic  activity. 
Overall, the  unemployment rate  was the lowest in 
Austria,  the  Netherlands  and  Luxembourg  (all 
below  5%)  and  the  highest  in  Spain,  Greece  and 
Latvia  (annual  averages  ranging  between  almost 
22% in the former and 16% in the latter). 

This  chapter  digs  deeper  in  the  main  features  of 
employment developments at EU country level. It 
provides also an analysis of job market flows and a 
disaggregated  overview  of  employment  dynamics 
by  age,  gender,  national  origin,  and  type  of 
contract  (temporary  versus  permanent,  part-time 
versus full-time). 

the 

The  remainder  of  this  chapter  is  structured  as 
follows.  Section  2.2  describes 
recent 
developments in the unemployment and the labour 
input.  Section  2.3  looks  into  employment  and 
flashes 
participation 
employment  developments  per  sector  of  activity. 
Section  2.4  provides  country  evidence  on  the  risk 
of  unemployment  persistence  and  the  build-up  of 

rates  developments  and 

long-term  unemployment.  The 
labour  market 
outcomes  for  specific  employment  groups  are 
presented in Section 2.5.

2.2.  UNEMPLOYMENT RATES

In  2011,  barring  Germany  and  Luxembourg,  the 
unemployment rate stood above pre-crisis levels in
the  rest  of  the  EU  (Graph  I.2.1).  Compared  to 
2010,  unemployment  rates  in  2011 declined  in  a 
minority  of  countries,  most  notably  the  Baltics, 
and to a lesser extent, Germany, Austria, Belgium, 
the Netherlands, Sweden, Finland, Hungary, Czech 
Republic.  The  major 
the 
unemployment  rate  were  recorded  in  Greece, 
Portugal, Spain and Cyprus. 

increases 

in 

Graph I.2.1:

Evolution of distribution of unemployment 
rates in the EU in recent years

25

20

15

10

5

0

2008

2009

2010

2011

Source: Eurostat, LFS.

Overall,  unemployment  dispersion  has  increased 
markedly with increasing cross-country differences 
since the start of the economic and financial crisis. 

Graph I.2.2: Unemployment rates in the EU Member States: 2008-2011 (15-74 years, as % of labour force)

25

20

15

10

5

0

S
E

L
E

V
L

T
L

E

I

K
S

T
P

E
E

G
B

U
H

L
P

7
1
A
E

7
2
U
E

R
F

T S

I

I

K
U

I

Y F
C

K
D

E
S

O
R

E
B

Z
C

T
M

E
D

U
L

L
N

T
A

(1) Countries are ranked in descending order of unemployment in 2011.
Source: Eurostat, LFS.

2008

2009

2010

2011

19

European Commission

Labour Market Developments in Europe, 2012

Graph I.2.3: Unemployment rates: actual and prediction from Okun’s law

17

13

9

5

1

-3

s
t

i

n
o
o
p
e
g
a

t

n
e
c
r
e
P

Changes in the unemployment rate (2008Q1-2011Q4):
actual and Okun's Law prediction

V
L

E

I

L
E

I

S

T
L

E
E

T

I

T
P

U
H

O
R

K
D

K
U

I

S F
E

U
L

L
N

R
F

G
B

Y
C

Z
C

E
D

E
B

T
A

T
M

E
S

K
S

L
P

Predicted

Actual

8

6

4

2

0

-2

-4

Changes in the unemployment rate in 2011:
actual and Okun's Law prediction

T
L

V
L

E
E

E
D

E
B

I

Z F
C

E
S

T
M

U
H

K
S

G
B

K
D

R
F

U
L

T
A

E

I

7
2
U
E

O
R

7
1
A
E

L
P

K
U

L
N

Predicted

Actual

I

T S

I

S
E

T
P

Y
C

L
E

(1) Predicted values are out-of-sample forecast based on an Okun's law estimated on a panel of 27 countries for the period
1997q1-2008q1. Country and period fixed effects are included. The Okun's coefficient is 0.28 In panel a) countries are ranked 
in ascending order of GDP growth.
Source: Commission Services.
A large share of unemployment is concentrated in
relatively  few  countries.  Spain  alone,  with  almost
5 million unemployed, accounted for over one fifth
in  the  EU  in  2011 
of  the total  unemployment
(Graph I.2.4) (more than one third in the euro area 
alone).  Because  of  their  size,  other  large  Member
States such  as France,  the  United  Kingdom  and
Germany, accounted also for an important even if
visibly smaller share of unemployment in the EU.

the unemployment rate (2008Q1-2011Q4) and that
predicted on the basis of country-level Okun's law
estimates. (12) It appears that for more than half of
the  EU  countries  the  increase  in  unemployment
since the crisis is lower than predicted by the Okun 
law  (e.g.,  Luxembourg,  Romania, Germany or
Austria). This confirms the relevant role played by
adjustment of working hours during the recession in
a  number  of  EU  countries.  However,  in some
Member States, most notably Spain, Lithuania, and
Bulgaria,  unemployment was  more  reactive  than
what predicted by the change in GDP alone. 

Graph I.2.4: Distribution of unemployment across EU:

percentage share of total EU unemployment
in 2011

l

a
t
o
t

f
o
%

25

20

15

10

5

0

S
E

R
F

K
U

E
D

T

I

L
P

L
E

O
R

T
P

U
H

L
N

E
S

G
B

K
S

Z
C

E
B

E

I

T
L

I

K F
D

T
A

V
L

I

E S
E

Y
C

U
L

T
M

Source: Eurostat, LFS.

In  incremental  terms,  the  jump  in  the Spanish 
unemployement  represented  almost  40% of  the
EU-wide  increase  in unemployment since  2008
(Graph I.2.5), going well beyond the share of other
large  Member  States.  Also  France,  Italy,  Poland
and Greece contributed with more than 10% to the
rise  in total  jobless  persons in  the  EU  since the
start  of  the  crisis.  Conversely, Germany gave  the
strongest negative  contribution  to  overall  EU
unemployment.

The  different  evolution  of unemployment  could  be
linked either to different output developments or to
a  different employment  response  to  economic
activity. Graph I.2.3 reports the observed change in

20

Graph I.2.5: Unemployment in the EU: contributions for the
increase in unemployment between 2008 and
2011 (in % of the total EU change)

40

30

20

10

0

-10

i

s
t
n
o
p
e
g
a
t
n
e
c
r
e
p

S
E

K
U

R
F

L
P

L
E

T

I

T
P

G
B

E

I

O
R

T
L

L
N

U
H

Z
C

K
D

K
S

V
L

E
S

I

E S
E

I

F

Y
C

T
A

E
B

T
M

U
L

E
D

Source: Eurostat, LFS.

Comparing  the  Okun  law  prediction  with  actual
unemployment  changes  for  year  2011  only,  it
appears  that  discrepancies  are  substantial  only in
some  countries  and follow  a  quite clear  pattern.
The  Okun  law  does  not  hold  on  the  one  hand  in
countries  characterised  by  a  protracted  or
worsening sovereign  and  financial  crisis  (Greece, 
Cyprus,  Portugal,  Spain,  Slovenia,  Italy, with

(12) The Okun's Law has been estimated with OLS and robust
variances  on  a  panel  of the  27  Member  States  over the 
period  1997Q1-2011Q4 controlling  for  country  specific
fixed  effects  and  period  effects;  the  panel  is  unbalanced
due to data availability.

 
 
 
unemployment growth  above  prediction),  on  the
other hand in countries in the verge of completing
their  rebalancing  process  and with  stabilising
financial systems (the Baltics, with unemployment
this
reduction  above  prediction).  All 
confirms 
that
uncertainty and risk premia, and private and public
sector  deleveraging  are  playing  a  key  role  in
explaining  diverging  employment  developments
across Europe.

in  all, 
in  Chapter  I 

the  point made 

2.3. 

EMPLOYMENT, 
HOURS WORKED

PARTICIPATION 

RATES

2.3.1. Employment and participation rates

As  stressed in  Chapter  1,  for  the  EU  as  a  whole, 
the drop  in  employment was  accompanied  by  an 
increase  in  participation over  the  crisis  period. 
While  the  employment  rate  has  increased  only in
very  few  countries,  the  activity rate  remained
above  or  at  its  pre-crisis  level  in  a most  Member
States,  most  notably  Poland,  Germany,  Lithuania
and Malta (Table I.2.1). However, drops in activity 
rates were recorded in Ireland, Bulgaria, Denmark,
Slovenia, Latvia and Finland.

Table I.2.1:

Activity rates, employment rates
unemployment rates

Activity rates
2010
71,0
71,4
67,7
66,5
70,2
79,4
76,6
73,8
69,8
68,2
73,4
70,5
62,2
74,4
73,2
70,5
68,2
62,4
60,3
78,2
75,1
65,6
74,0
63,6
71,5
68,7
74,5
79,5
75,5

2011
71,2
71,5
66,7
66,0
70,5
79,3
77,2
74,7
69,4
67,7
73,7
70,4
62,2
74,0
73,3
72,0
67,9
62,7
61,6
78,4
75,3
66,1
74,1
63,3
70,3
68,9
74,9
80,2
75,7

2009
70,9
71,4
66,9
67,2
70,1
80,2
76,3
74,0
70,8
67,8
73,0
70,5
62,4
74,0
73,9
69,8
68,7
61,6
59,1
79,7
75,3
64,7
73,7
63,1
71,8
68,4
75,0
78,9
75,7

EU27
EA
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

Employment rates
2010
64,1
64,2
62,0
59,7
65,0
73,3
71,1
61,0
60,1
59,6
58,6
63,8
56,9
69,7
59,3
57,8
65,2
55,4
56,1
74,7
71,7
59,3
65,6
58,8
66,2
58,8
68,1
72,7
69,5

2011
64,3
64,2
61,9
58,5
65,7
73,1
72,5
65,1
59,2
55,6
57,7
63,8
56,9
68,1
61,8
60,7
64,6
55,8
57,6
74,9
72,1
59,7
64,2
58,5
64,4
59,5
69,0
74,1
69,5

2009
64,5
64,5
61,6
62,6
65,4
75,3
70,3
63,5
62,2
61,2
59,8
64,0
57,5
69,9
60,9
60,1
65,2
55,4
55,0
77,0
71,6
59,3
66,3
58,6
67,5
60,2
68,7
72,2
69,9

Unemployment rates
2009
2011
2010
9,7
9,7
9,0
10,2
10,1
9,5
7,2
8,4
8,0
11,3
10,3
6,9
6,8
7,4
6,8
7,7
7,6
6,1
6,0
7,2
7,9
12,8
17,3
14,1
14,7
13,9
12,0
17,9
12,7
9,6
21,8
20,2
18,1
9,3
9,4
9,2
8,5
8,5
7,9
7,9
6,4
5,4
15,6
19,0
17,5
15,6
18,0
13,9
4,9
4,4
5,2
11,0
11,2
10,1
6,5
7,0
7,0
4,4
4,5
3,4
4,2
4,5
4,9
9,8
9,7
8,3
13,4
11,4
10,0
7,7
7,6
7,2
8,3
7,4
6,0
13,6
14,4
12,1
7,9
8,5
8,4
7,7
8,6
8,5
8,2
7,9
7,7

Source: Eurostat, LFS.

In  countries with 
in
the
unemployment,  the  increase  in  the number  of

increase 

largest

Labour market developments

Part I

and 

in  Latvia 

in
jobless  people  was  offset  by  a  decline 
participation  only 
Ireland.
Conversely,  the  unemployment  rate  could  have
been lower in Lithuania, Spain and Greece had the
participation
in 
countries  with a  relatively strong labour  market
performance  such  as Germany,  Poland  or  the
Netherlands, employment  and  participation  rates
have  evolved  in  tandem,  consistently  with  the
"discouraged worker" effect.

increased. Finally,

rate  not 

Overall, participation rates after the 2008 recession
behaved  differently  compared  with  previous
recessions  (notably  the  recessions  recorded  in  the 
early  1990s),  where  a  substantial  amount  of
younger and older workers exited from the labour
force in several EU countries.

in 

than  expected 

A comparison  between  actual  participation  rates 
and  those predicted on  the  basis  of GDP  (Graph
I.2.6)  reveals also  that  participation rates were  in
general more  resilient 
the
aftermath  of  the  recession started  in  2008.  It  is
worth  noting, however, that this phenomenon  was
particularly  accentuated  in large  EU  countries
(Germany,  France,  Spain,  Italy),  while  in  other
countries  the  response was  in  line  or  below
prediction  (e.g.,  Ireland, Belgium,  Denmark,  the
Netherlands). This partly contributes to explain the
strong resilience for the EU on aggregate.

Demography could  be  one  factor  driving  the
resilient behaviour of participation rates. However,
the  data  rather  reveal  that for  the  EU  as  a  whole
demography effects  have played  rather  in  the
opposite direction.

As a result of ageing, between 2007 and 2011, the
share  of  prime-age  workers in  the  labour force
declined by less than 1 percentage point, while that
of  older  workers  increased  by  1.2  percentage
points.  The shift  of  the labour  force  towards  age 
groups with  participation  rates  below  average  led
to a decline of the total participation rate by about
0.5  percentage  points,  which  was however offset
by  an  increase  in  participation  for  all  age  groups,
except young  adults  (age  20-24). This  evidence
corroborates  the  view  that  the  "added-worker
effect"  taking  place  notably  in  a  number  of  large
EU countries was a main driver for the exceptional
resilience  of  labour  force  participation  in  Europe 
since the crisis.

21

European Commission

Labour Market Developments in Europe, 2012

Graph I.2.6: Participation rate: actual and predicted on the basis of GDP and common trend

AT

BE

BG

C Y

C Z

D E

76

74

72

70

84

82

80

78

76

64

62

60

58

56

62

61

60

59

58

57

72

70

68

66

1985

1990

1995

2000

2005

2010

D K

1985

1990

1995

2000

2005

2010

H U

1985

1990

1995

2000

2005

2010

MT

68

66

64

62

60

58

76

74

72

70

68

76

72

68

64

60

56

85

80

75

70

65

60

55

1985

1990

1995

2000

2005

2010

EE

1985

1990

1995

2000

2005

2010

IE

1985

1990

1995

2000

2005

2010

N L

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

SI

SK

70.5

70.0

69.5

69.0

68.5

68.0

68

66

64

62

60

72

68

64

60

56

64

62

60

58

56

68

66

64

62

60

78

76

74

72

70

1985

1990

1995

2000

2005

2010

EL

1985

1990

1995

2000

2005

2010

IT

1985

1990

1995

2000

2005

2010

PL

80

76

72

68

64

60

75

70

65

60

55

74

72

70

68

66

76

74

72

70

68

66

1985

1990

1995

2000

2005

2010

ES

1985

1990

1995

2000

2005

2010

LT

1985

1990

1995

2000

2005

2010

PT

72

71

70

69

78

76

74

72

70

70

68

66

64

62

60

58

72

68

64

60

56

1985

1990

1995

2000

2005

2010

FI

1985

1990

1995

2000

2005

2010

LU

1985

1990

1995

2000

2005

2010

R O

80

76

72

68

64

60

71

70

69

68

67

66

76

74

72

70

68

66

82

80

78

76

74

1985

1990

1995

2000

2005

2010

FR

1985

1990

1995

2000

2005

2010

LV

1985

1990

1995

2000

2005

2010

SE

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

U K

activity rates - predictions from common trend and country specific response to GDP
activity rates

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

1985

1990

1995

2000

2005

2010

(1) The predicted values are the outcome of out of sample prediction from a regression estimated on the period 1993-2007 of 
the activity rate on a common trend and GDP, where the effect of GDP is allowed to vary across countries; country fixed 
effects are included in the estimate. 
Source: Commission services based on Eurostat, LFS.

Despite  the  current  resilience,  looking  forward, 
one  may express concerns about the sustainability 
of  high  participation  rates by  jobless  people  with 
if  labour  market 
low  labour  market  attachment
prospects remain poor and in absence of adequate 
policy frameworks.

2.3.2. The adjustment of hours worked 

Although  all  countries  have  recorded  a  fall  in 
hours worked per person, in some the reduction in 
the  average  hours  worked  per  worker  during  the 
2008-2009 crisis was an effective tool to adjust the 
labour  input  and  avoid  massive  job  losses  (Graph 
I.2.7). 

In 2011, the average hours worked per worker did 
not  get  back  to  pre-crisis  levels  in  almost  every 
Member  State.  This  helped  preserving jobs.  In 
contrast,  in  some  high-unemployment  countries, 
notably Spain and Portugal, the average number of 
hours  worked  has increased since the onset of the 
2008-2009  recession.  While  such  a  development 
labour  costs  and 
would  help  reducing  unit 

restoring  competitiveness, did  not  help  containing
the  massive process  of labour  shedding  in  these 
countries. 

On  the  opposite,  falling  hours  per  worker are 
associated with a recent increase in the number of 
employees  in  Belgium,  Austria,  Germany  and 
Poland. The  behaviour  of  total  labour  input  in 
Germany  reflects  the  sustained  recovery,  with  a 
rapid  return  of  average  hours  to  pre-crisis  levels,
an  increase  in headcount  employment  above  pre-
crisis levels, and signs of labour market tightening. 

2.3.3. Employment  developments  at  sectoral 

level

While manufacturing and construction have driven 
the  fall in  employment,  job  creation  in  services, 
namely  non-market  services,  mitigated  these  big 
drags  on  employment  in  a  large  number  of 
countries (Table I.2.2). After two years of negative 
growth,  job  creation  resumed  in  2011  in  industry 
and construction in most Member States.

22

Labour market developments

Part I

Graph I.2.7: Change in total hours worked (cumulative changes since 2008Q1)

8%

4%

0%

-4%

-8%

-12%

-16%

-20%

ES

LT

IE

LV

EE

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

Employees

Hours worked per employee

8%

4%

0%

-4%

-8%

-12%

-16%

-20%

SI

HU

EA17

PL

CZ

BE

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
0
1
0
2

1
1
Q
Q
8
9
0
0
0
0
2
2
Employees

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

1
1
1
Q
Q
Q
8
8
8
0
0
0
0
0
0
2
2
2
Hours worked per employee

3
Q
1
1
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

8%

4%

0%

-4%

-8%

-12%

-16%

-20%

8%

4%

0%

-4%

-8%

-12%

-16%

-20%

BG

PT

DK

CY

SK

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
1
Q
Q
9
0
0
1
0
0
2
2
Employees

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

1
Q
8
0
0
2

3
Q
1
1
0
2

1
1
Q
Q
0
9
1
0
0
0
2
2
Hours worked per employee

3
Q
1
1
0
2

1
Q
9
0
0
2

1
Q
8
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

FR

IT

NL

FI

AT

DE

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

1
Q
8
0
0
2

1
Q
9
0
0
2

1
Q
0
1
0
2

3
Q
1
1
0
2

Employees

Hours worked per employee

Source: Eurostat, National accounts.

Table I.2.2:

Employment growth in different sectors: 2008-
2011 (%)

Total

Agriculture Industry Construction

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

5.6
4.4
2.1
1.9
1.9
1.5
0.8
0.0
-0.7
-0.9
-0.9
-1.7
-2.0
-2.1
-2.6
-2.6
-3.0
-5.6
-5.8
-5.9
-8.3
-8.7
-9.8
-10.9
-11.1
-13.8
-14.5

6.1
7.1
-8.7
-0.9
-7.5
-1.2
-0.1
8.0
-8.7
-8.2

-12.7
-3.2
-0.7
-14.4
-6.9
6.9
-8.1
-2.7
-6.0
4.8
-3.4
-2.4
-6.4
-8.0
-26.2
2.1

1.1
-9.0
-7.7
-2.9
-5.3
-2.3
-9.2
-7.1
-5.6
-7.7

-11.3
-7.4
-3.4
-10.1
-11.9
-15.5
-10.5
-16.6
-15.2
-8.1
-17.3
-18.8
-20.3
-16.5
-16.0
-13.0

2.1
-6.1
3.3
3.5
5.9
0.4
8.2
-14.6
-6.0
-2.1

-0.3
-6.6
-12.9
-1.6
-2.6
-5.5
-16.5
-16.4
-21.4
-36.9
-34.0
-43.7
-43.1
-31.8
-48.1
-46.1

Market 
services
4.7
8.5
3.2
3.0
7.4
2.1
3.4
-1.5
-2.5
0.1

Non-market 
services
11.8
7.2
5.0
3.2
6.1
3.8
1.3
9.4
5.3
1.2

4.3
-0.5
0.5
2.3
-3.1
-3.2
-3.8
-6.2
-1.6
-5.9
-6.6
-1.2
-6.5
-5.3
-9.3
-11.8

0.2
1.3
-2.1
0.4
3.8
-1.0
1.1
1.0
5.0
-1.2
-2.9
-2.7
0.4
-9.3
1.0
-10.6

(1) (*) sector detail excludes Ireland and United Kingdom;
(**) sector detail excludes Ireland; (***) 2008-2010 for the
case of IE.
Source: Commission services.

that 

recorded 

In some countries, the construction sector has also
been a  major drag on employment and in fact the
dramatic
sector 
in 
consolidation.  The number  of  employed 
construction  nearly halved  in  Ireland,  Spain  and
the  Baltic  countries  over  the  latest number  of
to
years, with  construction  alone  amounting 

the  most 

around half of the total job losses in these Member
States.  Even  in  other  Member  States with much
milder  employment  reductions,  construction  jobs
have fallen by large margins. Only in a minority of
countries, employment  in  the  sector has  actually 
risen and almost always by small margins. 

Declining  jobs in  industry have  contributed  the
most  to  rising  unemployment.  For  the  EU  as
whole, the sector accounted for slightly more than 
half  of  the  net  job  destruction.  In  fact,  jobs  in 
industry have  declined  in  every  single  Member
State  barring  Luxembourg (where  it  has  little
weight on employment) since the beginning of the
crisis;  cumulated  job  falls  close  to  or  beyond  the
double  digit mark were  recorded  in  half  of  the
Member States,  most  severely in  Spain,  Lithuania
and  Greece.  However,  in many  industrialised
countries  employment  in  manufacturing  has  been
declining  since well  before 
the  2008-2009
recession as a consequence of shifts of production 
toward developing countries.

Market  services  had  a mixed  employment
performance, with  around  half  of  the  Member
States recording net employment growth (notably,
Poland, Malta and Germany) and the other half net
employment 
losses  (e.g.,  Latvia,  Ireland  and
Greece). 

23

European Commission

Labour Market Developments in Europe, 2012

the 

notably 

services, 

Non-market 
public
administration, was  the  only sector where  net
employment gains were recorded in most countries
(major  net  losses  only in  Latvia  and  Bulgaria).
Unlike  other  sectors,  employment  in non-market
services lost momentum in 2011, reflecting public
finances  consolidation  dynamics  also  over  the
government wage bill.

2.4. 

JOB MARKET FLOWS

The  analysis  of labour market  flows  provides
indication on the  sources of  unemployment
in
fluctuations,
notably whether 
unemployment 
to
fluctuations in separation, job finding rates or both.

changes 
related 

are  mostly 

rates

Graph I.2.8:

Job finding rates

30

25

20

15

10

5

0

I

E F
S

K
D

Y
C

R
F

K
U

T
A

L
N

L
P

U
E

E
D

S
E

A
E

O
R

Z
C

T
L

I

V S
L

E
E

E
B

E

I

T

I

U
H

T
P

R
G

G
B

K
S

2008q1-2011q4

2005q1-2007q4

2011q4

Source: Commission services' calculations on Eurostat LFS.

Four years since Great Recession, job finding rates
remain  low  or  are  further  dropping  in  most
countries  (Graph  I.2.8).  Since  the  onset  of  the
crisis, the most substantial drops in the job finding
rates were observed in Spain and in countries with
(United
relatively  dynamic 
Kingdom, the Baltics and Ireland).

labour markets 

At the end of 2011, the probability of finding a job
fell  considerably  in Cyprus,  Denmark,  Greece, 
Spain, Ireland and Romania. This reduced exit rate 
from unemployment coincided with an increase in
unemployment  duration 
(I.2.9).  By contrast,
Germany,  Romania,  the  Netherlands  and  Poland
recorded 
job  finding  rates  and  a
declining  duration  of unemployment  in  2011.  In
terms  of  levels, unemployment  duration  in  2011
appears  particularly high  in  Ireland,  Slovakia,  the
Baltics, Portugal, Italy and Hungary.

increased 

few 

exceptions 

As  a  result  of  the  crisis,  job  separation  rates
increased  in  almost  all  countries (Graph I.2.10), 
with
(notably  Germany). 
Particularly  large  increases were  recorded  in  the 
Baltics,  Ireland,  Greece,  Portugal,  Denmark.  In
spite  of  a  separation  rate  increase  not  among  the
highest  after  the  crisis,  Spain  recorded  the  largest
job  separation  rate 
job
in 
separation rates increased substantially in Portugal,
Greece,  Cyprus,  to  a  lesser  extent  in  a  number  of
other  countries  (including  Italy, Slovenia,  the
Netherlands,  Hungary)  and  further  raised  also  in
Spain.  Conversely,  reduced job  separation  rates
compared with pre-crisis average were recorded in
2011 in Germany, the Baltics, France.

levels.  In  2011, 

Graph I.2.10: Job separation rates

2,5

2,0

1,5

1,0

0,5

0,0

L
N

Z
C

E
B

T

I

G
B

I

K S
S

T
A

O
R

E
D

U
H

T
P

R
G

E

I

U
E

L
P

A
E

Y
C

K
U

K
D

E
E

T
L

V
L

I

R F
F

E
S

S
E

2008q1-2011q4

2005q1-2007q4

2011q4

Graph I.2.9: Unemployment duration in months

Source: Commission services' calculations on Eurostat LFS.

20
18
16
14
12
10
8
6
4
2

K
S

T I
P

U
H

E

I

E
B

G
B

O
R

E
E

T
L

L
E

E
D

I F

Z S
C

V
L

L
P

S
E

L
N

K
U

T
A

Y
C

K
D

E
S

N
F

I

2008Q1-2011q4

2005q1-2007q4

2011Q4

All  in  all,
in 2011  the  pattern  of  persistently
reduced  job  finding  rates  in  crisis-prone  countries
appears  confirmed, with  a  noteworthy worsening 
situation in Spain,  while a  new, enhanced process
of job destruction was set in motion in a number of
countries,  notably 
that
recorded the  increases  in  unemployment  much
above what  predicted  on the  basis  of  output
recessions (Greece, Portugal, Cyprus).

those  same  countries 

Source: Commission services.

24

Labour market developments

Part I

Graph I.2.12: Shifts in the Spanish Beveridge curve and
NAWRU (cumulated changes since 1996)

e
t
a
r

l

t
n
e
m
y
o
p
e
m
n
u
e
h
t
n

i

e
g
n
a
h
C

6

4

2

0

-2

-4

-6

-8

1996

2000

2004

2008

2012

NAWRU

Shifts in the Beveridge curve

Shift in the Beveridge curve and changes in the slope after the crisis

In  light  of  the  major  relevance  of  the  Spanish
unemployment  situation  from  a  EU  perspective,  a
focus  on  the  analysis  of  labour market matching
and  structural  unemployment  for  this  country  is
deserved.

Graph I.2.11 reports the Beveridge curve for Spain
for the period 1996Q1-2012Q1. The curve appears
to  be  shifting  rightward  since  2010,  a  sign  of
deterioration  of 
labour  market  matching
process. In 2011, vacancies fell and unemployment
raised, reflecting the slowdown of the second half
of the year. 

the 

Graph I.2.11: Beveridge curve for Spain, 1996Q1-2012Q1

Source: European Commission.

2006q3

2007Q1

2.5. 

LABOUR  MARKET  STATUS OF  DIFFERENT
GROUPS 

i

s
e
c
n
a
c
a
V

5

4

4

3

3

2

2

1

1

0

2001Q1

2006Q1

2004Q1

2002Q1

1998Q1

1997Q1

2011Q1 

1999Q1

2009q1

5

10

15

Unemployment rate

1996Q1

2010q1

20

2012Q1 

25

(1) Job vacancies are approximated with the survey based
indicator of labour shortages.
Source: European Commission.

Graph I.2.12 depicts the NAWRU and the shifts in
the Beveridge curve. (13) The Beveridge curve shift
is estimated also allowing for a possible permanent
change  in  the  relation  between  vacancies  and
unemployment  after
the  crisis.  The  estimates
reveal  an improvement  in  job matching  at mid-
1990s, taking place together with a reduction in the
NAWRU. (14) After 2008, there is instead evidence
of  an  outward  shift  of  the curve  (i.e.,  a  higher
unemployment  at  a  given  level  of vacancies),
which mirrors the increase in the NAWRU. 

Overall,  the  analysis  points  to  the  relevance  of
mismatch  in  the  Spanish  labour market for  the
extent to which unemployment becomes structural
and  therefore  for  the  market  response  of wages
associated to a given level of unemployment.

(13) See Chapter 1 for the methodology.
(14) This  is  consistent  with  evidence  that  the  drop  in  the
Spanish  NAWRU was  partly  driven  by  substantial  wage
moderation  triggered  by  the  immigration  boom  (Bentolila
et  al., 2008)  and the  related  expansion  of  the  construction
sector (European Commission, 2011a).

2.5.1. Gender

large  difference  between 

The 
employment
developments  for males  and  females  observed
during the 2008-2009 recession narrowed down in 
2011 (Graphs I.2.13 and I.2.14): the big decline in
male  employment  rates,  coupled  by  a  much
smaller  decline  in  the  female  employment  rate
came  to  a  standstill, without  however  being 
reversed.

Graph I.2.13: Men: employment, participation and

unemployment rates, EU 27

84

82

80

78

76

74

10

9

8

7

6

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

Employment rate
Participation rate
Unemployment rate (right scale)

Source: Eurostat LFS, age 20-64.

25

 
 
 
 
European Commission

Labour Market Developments in Europe, 2012

Graph I.2.14: Women: employment, participation and 
unemployment rates, EU 27

70

68

66

64

62

60

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

Turning to labour force participation rates, in 2011
the participation  of women  continued  to  increase,
while  that  of men  remained mainly  unchanged.
The peculiar feature observed during the recession
of  no  withdrawal
from  the  labour market  is
confirmed  also  in  2011.  As  a  consequence of  the
worse employment performance of men during the
recession,  the gender gap  in unemployment  rates
has become insignificant.

10

9

8

7

6

Employment rate
Participation rate
Unemployment rate (right scale)

2.5.2. Age

Source: Eurostat LFS, age 20-64.

The  gender  gap  in  employment  rates narrowed  in
the majority of countries (Table I.2.3), in particular
in Greece and Bulgaria owing to the strong decline
in men's  employment  rate  (-5.1  pps  and  -2.5  pps
respectively). By contrast, in the Baltics the gender
gap  in  employment  rates  increased  considerably
due  to  the strong  rebound  in male  employment.
This  illustrates  the higher sensitivity  of male
employment  to  the  business  cycle  compared  to
female  employment.  In  spite of  the  overall  trend,
in
in  some  Member  States 
employment rates remains substantial.

the  gender  gap 

Table I.2.3:

Employment rates by country and gender

The  young  are  a  vulnerable  group  for  several
reasons.  They  have  little  or no work  experience,
are  more  likely to  be  hired with  an unstable
contractual  relationship, and  their  short  tenure
usually implies  limited access  to  unemployment
benefits; the transition  from  education to  work  is
often difficult (see Box I.2.1).

All this is reflected in a youth unemployment rate
which has reached 21.3% in the EU, although the
increase 
(0.4 
percentage points). 

in  2011  has  been moderate 

Graph I.2.15: Employment rate change by 5-year age

group, EU-27

MT
IT
EL
CZ
LU
SK
PL
RO
CY
EA 17
EU 27
ES
HU
BE
UK
AT
NL
DE
FR
IE
PT
SI
DK
EE
SE
BG
FI
LV
LT

Men

2010-11

1.0
-0.2
-5.1
0.3
-1.1
0.8
0.6
-0.9
-2.1
-0.2
-0.1
-1.5
0.8
-0.5
0.1
0.6
-0.2
1.3
0.1
-0.9
-2.0
-2.2
0.4
5.8
1.1
-2.5
1.1
3.6
4.1

2011
78.8
72.6
71.1
79.9
78.1
72.7
72.2
69.9
80.4
75.0
75.0
67.6
66.8
73.0
79.4
80.8
82.6
81.4
73.8
68.6
73.4
71.8
79.0
73.5
82.8
66.6
75.6
68.7
67.7

2011
43.4
49.9
48.6
61.7
61.9
57.6
57.6
55.7
67.3
61.9
62.3
55.5
54.9
61.5
67.9
69.6
71.4
71.1
64.6
59.7
64.8
64.8
72.4
67.6
77.2
61.2
71.9
65.8
66.7

Women

2010-11

1.8
0.4
-3.1
0.8
-0.1
0.2
-0.1
-0.2
-1.2
0.2
0.2
-0.3
-0.1
-0.1
0.0
0.0
0.6
1.5
-0.1
-0.8
-0.8
-1.7
-0.6
1.9
1.5
-0.5
0.4
0.9
1.6

(1) Countries are sorted in descending order of the gap
between male and female employment rates.
Source: Eurostat LFS, age 20-64.

2

1

0

-1

-2

-3

-4

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

2008-2009

2009-2010

2010-2011

Source:

Graph  I.2.15 shows the  change in  employment
rates  by  age  groups since  the  beginning  of the
crisis. There is a positive relationship between age
and  the  employment  rate  developments:  older
cohorts  tend  to  perform  better  than younger
generations.

By  2011Q4,  persons  below  25  years  of  age  in  11 
Member  States  experienced unemployment  rates
of  about  28  per  cent  or higher  (Graph I.2.16).  In
contrast,  jobless  rate  of  adults  range  from  9  to  22
per cent in these countries. Even in countries with
relatively low youth unemployment (i.e. Germany,
Netherland  and Austria),  jobless  rate were  at  the 

26

Labour market developments

Part I

Graph I.2.16: Youth unemployment rates by country (age 15-24)

50

40

30

20

10

0

S
E

L
E

K
S

T
L

T
P

E

I

T

I

V
L

G
B

U
H

L
P

O
R

E
S

Y
C

E
E

R
F

2009

2010

2011

7
2
U
E

K
U

7
1
A
E

I

F

E
B

Z
C

I

U S
L

K
D

T
M

E
D

T
A

L
N

(1) Countries are sorted by youth unemployment in 2011.
Source: Eurostat LFS.
end  of  2011  between  1.4  to  2.5  times  the  adult
levels.  The  situation  differs  starkly  between
countries,  with 
in  youth
unemployment  in  Greece  and  Portugal; youth
unemployment  rates  are  rapidly falling  in  Estonia
and Latvia from the high peaks of 2010.

increases

strong 

Table I.2.4:

Risks of unemployment for the young: ratio 
between the unemployment rates of the
young and the adults

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

1983
:
2,6
:
:
:
2,0
2,5
:
4,4
:
:
3,6
:
:
7,2
1,7
:
3,0
:
:
2,2
:
:
:
:
:
:
2,4

1993
:
2,7
:
:
:
1,0
1,5
:
4,5
2,4
2,3
2,7
:
:
4,5
1,9
:
2,2
:
:
1,9
:
3,0
:
:
:
:
2,0

2000
1,4
2,7
2,3
2,4
2,3
1,1
1,6
2,0
3,3
2,1
2,2
2,3
3,6
2,2
3,8
1,7
2,0
3,2
1,6
2,5
2,4
2,6
2,6
3,2
1,9
2,9
2,4
2,7

2007
2,4
3,0
2,5
3,1
2,2
1,5
2,3
2,5
3,2
2,6
2,5
2,9
3,1
2,8
4,1
2,4
2,1
4,6
2,0
2,9
2,3
2,7
2,3
4,1
4,5
2,4
2,0
4,0

2011
2,4
3,1
2,7
3,5
3,1
1,5
2,3
2,0
2,8
2,4
2,6
2,8
3,3
2,7
4,2
2,3
2,4
4,1
2,1
2,7
2,0
3,2
2,6
4,1
4,4
2,1
2,8
3,6

Source: Commission Services.

In  spite  of  constantly higher  unemployment  rates,
in  a  number  of  Member  States  the  risk  of
unemployment did not change substantially during
the 2008-2009 recession. As shown by Table I.2.4, 
the unemployment  of  the young  relative  to  the
adults remains mainly unchanged or increase only 
marginally compared to the pre-crisis level in nine
including Austria,  Belgium,
Member  States, 

Germany,  France and Italy (15). The ratio declines
in  12  Member States, most  notably  Estonia,
Greece,  Spain,  the  Netherlands  and  the  United
Kingdom.  It  increases in  the  remaining  seven
Member States most notably in Cyprus, the Czech
republic, Poland, Portugal, Lithuania and Finland.

2.5.3. Education

In 2011, the employment rates of the low- and the
high-skilled continued to decline, albeit at a slower
pace  than  in  2010,  while  that  of  the medium-
skilled  remained  unchanged  (Table I.2.5).  For  the
low skilled,  there  is  a  considerable  difference  in
the  behaviour  of  the  employment  rate  by  gender,
with low-skilled  men doing  much  worse  than low
skilled women.

Table I.2.5:

Employment, participation and 
unemployment rate by education

Education

ISCED

Employment rate 2011

change 2010-2011

change 2009-2010

Participation rate 2011

change 2010-2011

change 2009-2010

Unemployment rate 2011

change 2010-2011

change 2009-2010

Low

1-2

Medium

3-4

High

5-6

53.0

-0.4

-1.0

63.1

0.0

-0.2

16.0

0.6

1.3

69.9

0.0

-0.5

76.5

0.0

-0.1

8.6

-0.1

0.6

82.1

-0.3

-0.6

87.0

-0.1

-0.2

5.6

0.2

0.4

Source: Eurostat LFS, age 20-64.

(15) In  Italy  the  relative  unemployment  of  the  young  is  U
increasing

early 2000s

and 

shaped  declining  until
continuously since then.

27

 
 
European Commission

Labour Market Developments in Europe, 2012

Box I.2.1: Youth unemployment during the crisis

less 

The  unemployment  risk  of  young  people  is  usually 
higher  than  that  of  adults,  and  younger  cohorts  have 
on  average  higher  unemployment.  This  is  a  result  of
various  factors  including  lower  work  experience, 
relatively  short  or  unfinished  education  and  more 
unstable  contractual  relationship, 
job-search 
contacts. Since the average time spent in education is 
slightly  above  17  years,  those  who  enter  the  labour 
market  between  the  age  of  15  and  24  years  leave 
job 
education  early  and are  at  higher  risk of 
instability.    Staying  longer  in  education  or  training, 
investing  more  in  human  capital  could be  a  valid 
answer to lack of job opportunities. However, there is 
little  evidence  that  during  the  crisis  at  the  EU-level 
that  this  happened.  The  proportion  of  young  that  are 
neither  in  education,  nor  in  employment  or  training 
(the so-called "NEETs") has increased in the EU since 
the  onset  of  the  crisis,  more  in  countries  where  their 
level was already high (e.g. BG, ES, IE, IT, EL where 
20% of the young population are NEETs).

Being  neither  in  education,  nor  in  employment  or 
training is a route towards marginalisation, especially 
in  countries  such  as  Italy  and  Greece  where  young 
people experience a long period or repeated spells of 
being out of work and education (Quintini and Martin, 
2006).  Leaving  school  early  is  related  to  social 
disadvantages like  coming  from  a  deprived  family  or 
entering  into  a  cycle  of  material  deprivation,  social 
exclusion  and  poverty.  Young  workers  entering  the 
labour  market  with  fixed-term  contracts  are  often 
trapped  in  jobs  with  limited  prospects  of  acceding 
permanent  positions,  in  particular  in  countries  where 
partial  labour  market  reforms  have  reduced  the 
employment protection of temporary contract with no major changes for permanent contract workers, thus 
creating a gap in the employment protection for these two kinds of contracts. 

Unemployment  creates  big  individual  and  social  burdens.  Job  losses  entail  large  and  persistent  earning 
losses for the affected (Wachter and Davis, 2012). These costs can be even higher for the young low-skilled 
who  have  left  education  early.  The  relevance  of  the  long-term  consequences  of  early  unemployment  (so-
called  scarring  effects)  depend  on  a  series  of  factors  including  the  loss  of  skills  and  work  experience, 
employers'  belief  that spells  of  early  unemployment  signal  low  commitment  to  work  and/or  low 
productivity.  Scarring  effects  are  generally  less  persistent  in  less  regulated  markets  such  as  the  United 
Kingdom or the United States; on the contrary they tend to persist up to 15 years of labour market entry in 
Spain, France or Germany (OECD 2010). Being out of work or education also entail lost public revenues; 
estimates  for 21 EU countries suggest that NEETs  cost €100 billion, about 1% of their aggregated GDP - 
€94 billion of foregone earnings and €7 billion of excess transfers. (Eurofound, 2011).

While  youth  unemployment  is  everywhere  higher  than  overall  unemployment,  there  are  important 
differences  across  countries. These  differences  underline  the  role  of  education  and  particularly  vocational 
education and apprenticeship schemes in helping the young to make smooth transitions from school to work. 

(Continued on the next page) 

28

Labour market developments

Part I

Box (continued)

However, other factors include the role of the public sector as employer of last resort (Alesina et al 2000), 
the level and limited differentiation of minimum wage (e.g. Neumark and Wascher, 2004),  the effectiveness
of active labour market policies (ALMPs).

The  prevalence  of  high  youth  unemployment  rates
points to a dysfunctional labour market. However, the
large majority  of  the young  are  still  studying  (about
67% in the EU) and as such are not considered in the
pool  of  those  that  are  actively  engaged  in  the  labour
market  (either working  or  looking  for  a  job).  For
example, in Spain only about 41% of the young aged
between  15  and  24  years were  active  in  2011  and  of
these  46.4%  were  unemployed. This meant  that  19%
of the young population were looking for jobs in vain 
–outrageously  high,  but  far  from  the  “every  second 
youngsters cannot find a job” misinterpretation that is
so widespread.

Governments have  adopted  various instruments  to  support  young  people during  the  crisis,  including
promotion of apprenticeships, training and work experience programmes; development of education systems 
to  improve  their  skills,  tax  incentives  and  employment  hiring  and  training  subsidies.  A  comprehensive
solution,  "Youth  guarantees"  seem  to  becoming more  popular.  Youth  guarantees  promote  rapid  action  for
NEETs  - e.g.  in Finland  anyone  aged  16–25  and  enrolled  with  the  public  employment  service  for  at  least
three  months  is  entitled  to take  part  in  the  job  guarantee,  i.e.: either  find  a  job  or  enrol  in  the  regular
education system more quickly. (Räisänen et al, 2012; Eurofound, 2012).

Table I.2.6:

Unemployment rates of the low skilled by
country

2011 10-11

09-10

2011 10-11

09-10

NL

CY

LU

MT

RO

AT

DK

IT

UK

SE

FI

BE

PT

DE

FR

5.7

7.7

7.8

7.8

8.1

8.2

9.6

10.3

12.5

12.7

13.0

13.4

14.0

14.1

14.5

-0.5

0.4

2.5

-0.2

1.4

0.0

0.0

0.3

0.5

-0.8

0.0

-1.3

1.8

-1.9

-0.1

SI

EU 27

EA 17

EL

PL

CZ

IE

HU

EE

BG

LV

ES

LT

SK

1.7

0.9

-1.9

0.4

-1.3

-1.2

1.7

0.9

1

1

1.8

1.5

1.6

-0.9

1.1

14.7

16.0

16.6

18.1

19.0

23.1

23.3

24.5

25.9

26.5

26.7

28.2

38.7

41.1

2.1

0.6

0.6

5.5

0.8

-0.9

2.3

-0.2

-4.3

3.8

-3.5

1.9

-1.1

-1.9

3.6

1.3

1.4

3.2

3.0

0.7

4.2

2.1

3.4

7.5

1.2

2.8

10.8

2.9

(1) Countries are ranked in ascending order of the 
unemployment rate in 2011.
Source: Eurostat LFS, age 20-64.

The participation rate of all three skill groups was
virtually unchanged.  The  developments  of  the
employment  and  participation  rates  resulted  in  an
increase  in  the  unemployment  rate  for  the  low 
skilled  (+0.6  percentage  points)  and  the high 
skilled  (+0.2  percentage  points)  and  a  slight
decline  in  the  rate  of  the  medium skilled  (-0.1 
percentage points).

struggling with 

There  are  remarkable  cross-countries  differences
in  the  labour market  outcomes  for  the  low-skilled
I.2.6). Two  countries,  Lithuania  and
(Table
Slovakia,  are 
low skilled
unemployment rates as  high  as 40%;  however,  in
both  countries  the  rate  has declined  slightly. On 
the  other  hand,  seven  countries  have  low skilled
unemployment  rates  below  10%.  The  fastest
increase  was 
(+5.5
percentage points), reaching 18.1%.

in  Greece 

recorded 

in 

2.5.4. Nationality

In  2011 
the  employment  rate  of  foreigners
increased, while  that  of  nationals  (EU  citizens
working  in  their  home  country)  stagnated.  The
employment  of  EU-foreigners 
(EU  citizens
working  in  a  country  other  than  their  home
country) gathered  further  pace,  increasing  by  5%.
The employment of non-EU foreigners (who  hold 
no  EU  citizenship)  also  increased,  but – similarly
to  2009  and  2010,  at  a  smaller  pace,  growing  by
intra-EU  labour migration 
2%.  On  the whole,
continued  strongly  despite  the  crisis. – while  in
2005 4.2 million EU citizens were working abroad,

29

European Commission

Labour Market Developments in Europe, 2012

in  2011  this  amounted  to  6.3 million,  an  increase
of 300 thousand last year.

labour  market
Germany with  her  favourable 
continued  to  attract foreigners,  and  added  110
thousand  EU-foreigner  and  70  thousand non-EU
foreigner  to  its  employed  labour  force – having
now  over  1.5 million  EU-foreigner  and  over  2
million  non-EU  foreigner.  By  contrast,  in  crisis-
stricken  Spain,  Greece 
the
employment of foreign workers shrunk at a higher
pace  than that  recorded  for the  employment  of
natives.

Portugal,

and

Graph I.2.17: Employment growth by nationality, EU-27

2.5.1. Contract Type

(Graph

recession 

I.2.19).  With

Temporary employment took much of the brunt of
the 
growth
resuming,  albeit  in  an  uncertain environment,
temporary  employment  returned  to  increase  in
2010  and  continued  to  grow  in  2011.  Permanent
employment in contrast started to contract later but 
also returned to modest growth only in 2011. Self-
employment in 2011 lost much of the gain made in 
2010.

Graph I.2.19: Employment growth by contract type, EU-27

4

2

0

-2

-4

-6

%

12

8

4

0

-4

%

2007

2008

2009

2010

2011

Source: Eurostat LFS.

2007

2008

2009

2010

2011

Pemanent employees
Self employed

Temporary employees

The young were the most impacted by the decline
in  temporary  employment  as 42.5%  of  the young 
have  fixed-term  contracts  (Table I.2.7),  against
12.4% for those aged between 25 and 49 and less
than 7% for those in the 50-64 age bracket.

Table I.2.7:

Share of temporary employees, by age

Age

15-24

25-49

50-64

2006-2009

40.6

12.1

6.8

2010

42.1

12.1

6.8

2011

42.5

12.4

6.7

Source: Eurostat LFS.

(Table

I.2.8),  while 

Part-time employment continued to increase, albeit
modestly 
full-time
employment 
remained  stable. This  evidence
corroborates  the  view  that part-time  is mostly
counter-cyclical, so that it expected to grow faster
when  unemployment
is high  as  in  the  current
juncture. The share of part-time employment in the
labour  force  increased  most  in  Slovenia,  Slovakia
and Malta, while the major reduction was recorded
in Greece.

Nationals
Non-EU-Foreigners

EU-Foreigners

Source: Eurostat LFS.

Net  migration  flows reveal
that  migration  has
contributed  to  labour market adjustment  at  a high
extent in a few countries (Graph I.2.18). In Latvia
and Ireland, outward net migration has contributed
to  absorb  the  large  pool  of unemployed.  Net
migration  has  become  negative  only  in  2011  in 
Spain,  despite  the high  unemployment  rate. For
Luxemburg, Germany, Austria, Belgium, Sweden,
Finland, net inward migration flows are consistent
with relatively strong employment dynamics.

Graph I.2.18: Net migration rates (% of population)

25

20

15

10

5

0

-5

-10

-15

T
A

E
B

Z
C

E
D

K
D

I

S F
E

R
F

K
U

L
E

U
H

E

I

T

I

U
L

V
L

T
M

L
N

I

T S
P

E
S

2010

2011

Source: Eurostat

30

Labour market developments

Part I

the  Okun  law in the  countries with  persistent  or
aggravating  sovereign  crises  (Greece,  Portugal,
Spain,  Cyprus), while  drops  in  unemployment
stronger than predicted in countries on the verge of
rebalancing 
conditions
stabilising (the Baltics).

and with 

financial 

Ireland).  Hours worked 

Activity  rates were  resilient  in most  countries,
more  than  expected  on  the  basis  of historical
regularities, with  some  noteworthy  exceptions
(e.g., 
resumed,  but
stabilised  below  pre-crisis  levels  in  a majority  of
countries. In a few countries (Spain, Portugal) the
increase in  the  average  hours worked would  help
reducing labour costs looking forward, but did not
help containing the substantial labour shedding.

Four years  after  the  start  of  the  crisis  job  finding
rates remained low in most Member States and are 
further worsening  in  some  countries, notably 
Spain. Job separation rates increased in a majority
of countries, with very substantial increases in the
same  countries  exhibiting  a  major  divergence  of
the  employment  response  to the  current  recession
(Greece, Portugal). 

As  a  result  of  the  persistent  low  rate  of  job
creation,  the  duration  of  unemployment  has  risen
in most Member States, with the biggest increases
recorded in Ireland, Slovakia, Spain, the Baltics. In
the  Spanish 
light  of 
unemployment  problem,  avoiding 
longer
unemployment  duration  translates  into worsened
labour market mismatch  in  this  country  is  a
priority  to  prevent  that  a high  share  of  the  euro-
area unemployment becomes structural.

sheer 

size

that

the 

of 

the  recovery, 

light  of widespread  uncertainty  of 

the
In 
sustainability  of 
the  share  of
temporary employment in the euro area has further
increased. The share of low-skilled employment is
falling in most countries, while the gap in terms of
worsening  employment  rates  for males  compared
with  females 
to  an  end.  Youth 
unemployment  rates  increased  dramatically  in
Greece,  Portugal,  Spain  and  remained worryingly
high in other countries, notably the Baltics.

is  coming 

Table I.2.8:

Part-time and full-time employment, EU-27

Full-time employment (Millions)

Part-time employment (Millions)

Share of part-time for men

Share of part-time for women

Source: Eurostat LFS, age 15-64.

2010

173.0

39.4

7.8

31.4

2011

173.0

40.0

8.1

31.6

of 

distribution 

employment 

between 
The 
permanent  employment,  temporary  employment
and  self-employment  differs  considerable  across
EU (Table I.2.9), with the Mediterranean countries
as well  as  Poland  characterised  by strong
segmentation. At EU level, the share of permanent
employment was  almost unchanged  in  2011,  but
relatively  strong  increases took  place  in  some 
countries, particularly Romania and in Portugal, as
the share of self-employment declined.

Table I.2.9:

Distribution of contract types among the 
employed in % by country

Permanent
contract

Temporary
contract

Self
employed

LT
EE
LU
BG
LV
DK
UK
MT
HU
AT
BE
SK
RO
IE
DE
SE
CZ
FR
FI
EU 27
CY
EA 17
SI
NL
IT
PT
ES
EL
PL

2011
88.4
87.8
85.7
85.3
83.9
83.5
81.6
81.3
80.7
80.0
79.3
78.7
78.5
76.5
76.2
76.2
76.1
75.5
74.1
73.4
73.1
72.0
71.9
70.5
66.8
64.9
63.0
60.1
59.1

chg
-0.2
-0.8
-0.5
0.9
0.0
-0.3
-0.1
-0.1
1.0
-0.3
-0.5
-0.8
1.5
-0.2
-0.1
-0.1
-0.2
-0.4
-0.1
0.1
0.3
-0.1
-1.0
0.1
-0.3
1.5
-0.2
-0.1
0.3

2011
2.5
4.1
6.6
3.6
5.8
8.2
5.2
5.7
7.9
8.5
7.7
5.5
1.2
8.4
13.2
14.4
6.6
13.5
13.6
12.0
11.6
13.5
15.8
15.7
10.3
18.5
21.4
7.9
21.7

chg
0.4
0.7
0.0
-0.2
-0.3
0.4
0.0
0.8
-0.6
0.3
0.7
0.8
0.3
0.5
0.1
0.5
-0.2
0.2
0.1
0.1
0.1
0.2
0.8
-0.1
0.5
-0.4
0.4
-0.6
-0.2

2011
9.1
8.1
7.7
11.0
10.3
8.4
13.2
13.0
11.4
11.5
12.9
15.8
20.3
15.1
10.6
9.4
17.3
10.9
12.3
14.6
15.3
14.5
12.3
13.8
22.8
16.6
15.6
32.0
19.2

chg
-0.2
0.1
0.5
-0.6
0.3
0.0
0.1
-0.7
-0.4
0.1
-0.2
0.0
-1.8
-0.3
0.0
-0.4
0.4
0.1
0.0
-0.2
-0.4
-0.1
0.2
-0.1
-0.2
-1.0
-0.2
0.7
0.0

(1) Countries are ranked by share of permanent contracts.
Source: own calculations based on Eurostat LFS.

2.6.  CONCLUSIONS

Labour market  conditions kept  diverging  across
the EU in 2011, not only because of different paths
of economic activity but also because of a different
response  of  employment  to growth.  The  increase
unemployment was much  above  that  predicted  by 

Outward migration  from Latvia  and  Ireland  is
becoming  a  relevant margin of  absorption  of  the
high  pool  of unemployed  in  these  countries.  By
contrast,  in  Spain  net migration  became negative
only in 2011.

31

3.

RECENT WAGE AND LABOUR COST DEVELOPMENTS

3.1. 

INTRODUCTION

In  2011,  nominal  compensation  per  employee  in 
the  euro  area  accelerated  somewhat  on  aggregate,
but  with  very  heterogeneous patterns across
countries.  While  Germany, Belgium,  Austria,
France  and  Finland  recorded growth  rates  above
2.5%,  compensation  per  employee  declined  in
Greece,  Ireland  and  Portugal,  and  grew  at  rates
below  1%  in  Malta,  Spain  and  Slovakia.  In  the
non-euro  area  countries,  compensation  per
employee  grew  moderately  in Sweden,  the  Czech
Republic,  Denmark  and  the United Kingdom;  it
accelerated in  Poland,  and  became  positive  after
years  of  negative growth  in  Latvia, Lithuania  and
Hungary.

This  chapter  reviews wage  and  unit  labour  costs
developments  at  country  level, with  a  view to
highlight  patterns  of wage  adjustment. Aggregate
wage  dynamics  are  disentangled  in  such  a way  to
analyse the contribution of different sectors of the
economy and of the government. Unit labour cost
the main
dynamics  are  distinguished  along 
components 
security
social
wages, 
contributions, productivity. Developments in price 
competitiveness  indicators  based  on unit  labour
to  euro-area 
costs  are  discussed 
adjustment dynamics and external re-balancing.

in  relation 

of

The  remainder  of  this  chapter  is  organised  as
follows. The next section describes the main trends
in wages and unit labour costs. Section 3.3 looks at

the  evolution  of REERs  and  external  adjustment.
Section 3.4 concludes.

3.2. 

TRENDS  IN  WAGES AND UNIT  LABOUR
COSTS 

The  dynamics  of  compensation  per  employee
across  the  EU  remained  highly  heterogeneous  in
2011, ranging between growth rates around 3% in 
Germany  and  a  similar  rate  of  negative  growth  in
Greece  (Graph I.3.1).  Ireland  and  Portugal  are 
together with  Greece  the  euro  area  countries
recording  negative  growth  rates  in  compensation
per  employee  in  2011. Malta,  Spain  and  Slovakia
in  compensation  per
registered growth  rates 
employee  below  1%, while Germany,  Belgium,
Austria, France  and  Finland recorded  the  highest
growth rates.

In  the non-euro  area  countries,  developments  in
compensation  per  employee were  also uneven.
While the  growth  rate 
in  compensation  per
employee ranges from around 3.5% in Lithuania to 
above  7%  in  Bulgaria,  that  in Sweden,  the  Czech
Republic, Denmark and the United Kingdom, was
below 2%.

the  relation  between 

the
Graph  I.3.3 shows 
variation in  compensation  per employee  and  its
level measured  in  Purchasing  Power  Standards
(PPS). It is expected that catching-up countries, on 
average, will  display  higher  growth  rates  in
compensation  per  employee.  Indeed,  in  2011,
countries with lower  levels of  compensation  per

Graph I.3.1: Nominal compensation per employee, y-o-y % change

15

10

5

0

-5

-10

-15

U
L

T
A

L
N

Y
C

T
M

E
D

Z
C

I

O S
R

K
D

K
U

E
B

T F

I

I

E
S

R
F

L
P

A
E

G
B

T
P

U
H

L
E

E

I

K
S

E
E

T
L

V
L

S
E

(1) Countries are displayed in ascending order of the unemployment rate in 2010.
Source: DG ECFIN AMECO database.

2009

2010

2011

32

Labour market developments

Part I

Graph I.3.2: Compensation per employee, y-o-y % change

4

3

2

1

0

-1

7
6
5
4
3
2
1
0
-1
-2

20

15

10

5

0

-5

-10

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

BE

DE

4
Q
0
1
0
2

FR

1
Q
1
1
0
2

2
Q
1
1
0
2

3
Q
1
1
0
2

4
Q
1
1
0
2

AT

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

ES

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

PL

1
Q
1
1
0
2

2
Q
1
1
0
2

4
Q
0
1
0
2

SE

4
Q
1
1
0
2

3
Q
1
1
0
2

UK

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

BG

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

EE

4
Q
0
1
0
2

HU

1
Q
1
1
0
2

2
Q
1
1
0
2

4
Q
1
1
0
2

3
Q
1
1
0
2

RO

4

3

2

1

0

-1

8

6

4

2

0

-2

-4

15
10
5
0
-5
-10
-15
-20
-25
-30

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

DK

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

IT

4
Q
0
1
0
2

NL

1
Q
1
1
0
2

2
Q
1
1
0
2

3
Q
1
1
0
2

4
Q
1
1
0
2

PT

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

CZ

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

SI

1
Q
1
1
0
2

2
Q
1
1
0
2

4
Q
0
1
0
2

SK

4
Q
1
1
0
2

3
Q
1
1
0
2

FI

1
Q
9
0
0
2

2
Q
9
0
0
2

3
Q
9
0
0
2

EL

4
Q
9
0
0
2

1
Q
0
1
0
2

2
Q
0
1
0
2

3
Q
0
1
0
2

IE

4
Q
0
1
0
2

LT

1
Q
1
1
0
2

2
Q
1
1
0
2

4
Q
1
1
0
2

3
Q
1
1
0
2

LV

(1) For Bulgaria Hourly Labour Cost Index is used instead of compensation per employee. Countries are grouped according
to the level of variation in compensation per employee to facilitate a better reading of the changes.
Source: Commission services, based on Eurostat data.

employee  measured  in  PPS recorded  on  average 
higher growth rates. This was particularly the case
of Bulgaria, Hungary and Poland.

Graph I.3.3: Compensation per employee, y-o-y % 

change vs level of compensation in PPS, 2011

to 

Turning 
the  quarterly  profile  of wage
developments,  the  overall  picture  varies markedly
reflects
across  countries  (Graph I.3.2).  This
different conditions and exposures to the recession,
need  of  rebalancing 
in  some  countries  and
underlying labour market institutions. For the euro
area  as  a  whole  the  growth  rate  in  compensation
per employee reached the lowest level in the third
quarter  of  2009  and 
thereafter, 
stabilising  at  a  rate  slightly  above  two  per  cent  at
the end of 2011.

recovered 

)

S
P
P

(
n
o

i
t

a
s
n
e
p
m
o
C

NL

LU

AT
BE

FR

ES

SE

IT

UK
FI

DK

DE

SI

CY

MT

SK

CZ
EE

PL

HU

RO

LV

LT

BG

50

45

IE

40

EL

PT

35

30

25

20

15

10

5

0

-4

-2

0

2
% change

4

6

8

Source: DG ECFIN AMECO database.

33

 
European Commission

Labour Market Developments in Europe, 2012

Graph I.3.4: Real product and consumption wages, HICP and GDP deflator, y-o-y % change, 2011

9

7

5

3

1

-1

-3

-5

-7

E
B

G
B

Z
C

K
D

E
D

E
E

E

I

L
E

S
E

R
F

T

I

Y
C

V
L

T
L

U
L

U
H

T
M

L
N

T
A

L
P

T
P

I

O S
R

I

K F
S

E
S

K
U

Real product wage

Real consumption wage

GDP deflator

HICP

Source: DG ECFIN AMECO database.

Germany,  after  having  recorded  negative  growth
rates  in  compensation  per  employee  in  the  last
three  quarters  of  2009,  recorded  a  robust growth 
thereafter with growth rates peaking at 3.5% in the
second  quarter of  2011. The  conclusion  of  a
collective  agreement  in  May  2012  granting wage
increases  above  4%  in  the  metal  and  electrical
engineering  sector  preludes  to  sustained wage
growth looking forward.

In  France  and  Belgium,
the  growth  rate  in
compensation  per  employee  accelerated  strongly
during 2011.  In Austria,  after  the drop in  the  last
quarter  of  2009  the  growth  rate  in  compensation 
per employee has been increasing steadily.

countries 

The  adjustment  of wages was in  general sharpest
in the  euro  area
facing  stronger
adjustment and rebalancing needs. In Portugal, the
growth  rate  in  compensation  per  employee  has
been  declining steadily  and  recorded negative
growth rates in  the  last  three  quarters  of  2011.
Much of the wage reduction comes from dynamics
in the public sector, as shown in the remainder of
the chapter. 

In Italy, after a strong rebound in 2010, the growth
rate  in  compensation  per  employee  decelerated
sharply in the last two quarters of 2011. In Spain,
there  was  a  strong  deceleration  in  the growth  rate
in compensations in 2010, that however recovered
slightly in 2011.

consecutive  quarters.  Wage  reductions  in  this
country come both from the public and the private
sector. Most of the wage reduction are linked to re-
negotiations of individual and firm-level contracts.
Early signs  of wage  reductions  as  a  result  of
renegotiations  of  collective  contracts  are  also
becoming visible.

In the  coming  years,  wage  moderation in  the
private sector in Italy, Spain, Portugal and Greece 
could  be  linked,  inter-alia,
to  recently  adopted
reforms in the wage setting system (see Chapter 4).

In Ireland, growth  rates  returned  to positive
territory  after  6  consecutive  quarters  of  decline  in
compensation.

In 
the  non-euro  area  countries, Latvia  and
Lithuania, after sharp declines in compensation per
employee  during  2009  and  2010, saw  the  growth
rates  in compensation  per  employee  growing  at
robust  rates in  2011.  In  Lithuania,  compensation 
per employee grew above 7% in the fourth quarter
of 2011. In Hungary, compensation also grew at a
robust  rate  after  several  quarters  of negative
growth rates. The Czech Republic, Sweden and the 
United Kingdom, after a relative strong growth in
compensation per  employee  in  2010, registered  a 
relative moderate growth in compensation in 2011.

3.2.1. Real  consumption  and  production

wages

In  Greece,  the  growth  rate  in  compensation  per
employee  is recording  negative  values for  seven

Developments  in  the GDP  deflator  and  the  HICP
influence the  growth  rate  of  real  product wages

34

and  real  consumption wages.  The  relevant wage
variable for  firms  is the real  product  wage, which
is  the  price  of  labour  relative  to  the  value  added
deflator. For consumers, the variable of interest is
the  real  consumption wage, which  is their  take-
home  pay  relative  to  the price  of goods  and
services they purchase.

Real product wages declined in 15 Member States.
Greek  employers  benefited  from  the  sharpest
decline in the cost of labour, with the real product
wage declining by 4.7%. By contrast, real product
wages  increased  at  a  rate  above  2%  in  Bulgaria,
Germany,  Hungary  and the  Czech Republic.  Real
consumption wages declined in 21 Member States 
in  2011. The Greek and  Portuguese workers
suffered the sharpest declines in purchasing power
following a drop in real consumption wages of 6%
and  4%.  In  Estonia,  Slovakia,  Ireland,  Spain,  and
the  United  Kingdom,
the  decline  in  purchasing
power was  above 2%.  Bulgaria saw  the real
consumption  wages  growing  at  3.4%,  the  fastest
rate in the EU.

3.2.2. Real  compensation  per  employee
productivity and unemployment

Real wage growth  aligned with  productivity  is  a
condition  for  wage  growth consistent  with  labour
demand.  Graph I.3.5 shows  the  average growth
rate  in  real  compensation  per  employee  and the
average growth rate in productivity over the period
2009-2011. During this period the average growth
in real compensation per employee was marginally
faster than the growth in productivity. The average
is
in
productivity in  2009. Over  the  last  two years,  on 
than
average,
compensation.
In  2011, real  compensation  per
employee grew by 0.7%, while labour productivity 
grew by 1.4%.

the sharp fall 

influenced  by 

productivity 

strongly 

faster 

grew

between 

difference 

cumulative 

The 
real
compensation  per  employee and  productivity is
above 1 percentage point in Luxembourg, Cyprus,
Slovakia,  Slovenia  and  Bulgaria.  On  the  contrary,
it  is  significantly negative  in  the  Baltic  countries
and Ireland. Hungary, Romania, Spain, Greece and
Poland registered a cumulative negative difference
the
above  1  percentage  point.  In spite  of 
differences in the  order  of magnitude  between 
average  growth  rates  in  these  two variables,  there
is a clear positive correlation between the average

Labour market developments

Part I

growth  rates  in  real  compensation  per  employee
and  average  growth  rates  in  labour  productivity 
over the past three years.

Graph I.3.5: Real compensation per employee and

productivity, average growth rates 2009-2011

y
t
i
v
i
t
c
u
d
o
r
P

LV

LT

EE

RO
HU

MT

EL

4

3

2

1

0

-1

-2
LU

-3

ES

PL

SK

BG

IE

SE

DK

PT
FI

BE

UK

CZ

FR

AT
CY

IT
DE

NL
SI

-6

-4

-2

0
Real compensation

2

4

6

Source: DG ECFIN AMECO database.

Graph I.3.6 plots the growth rate in real unit labour
costs  in  2011  against the unemployment  rate  in 
2010. There is a negative relationship between the
levels of unemployment in 2011 and the evolution 
of  real  unit  labour  costs  in  2011. The  adjustment
seems conducive to convergence in unemployment
rates. 

Graph I.3.6: RULC, y-o-y % change 2011 and 

unemployment rate in 2010

2

1

0

-1

-2

-3

-4

-5

-6

-7

C
L
U
R

CZ

DE

CY

SI

IT
DK
UK

NL
AT
LU

BE

FR

HU

PL

PT

MT

SE
FI

SK

BG

IE

EL

RO

EE

LV

ES

LT

0

5

10

15

20

25

Source: DG ECFIN AMECO database.

UR 2010

the  degree  of  adjustment

However, 
varies
markedly  across  Member  States.  Romania,
Bulgaria,  Greece,  Ireland  and  Lithuania,  recorded
lower unemployment  rates  than  Spain  but saw  a
stronger  downward  adjustment  in  real  unit  labour
costs. The downward adjustment in real unit labour
costs  in  Portugal  was  similar  to  that  of  Poland,
Sweden,  Malta  and Luxembourg, while  these
countries have  a  lower unemployment  rate.  In

35

European Commission

Labour Market Developments in Europe, 2012

Graph I.3.7: Compensation per employee by sector, y-o-y % change 2011

20

15

10

5

0

-5

-10

BE

BG CZ

DK DE

EE

EL

ES

FR

IT

CY

LV

LT

LU MT NL

AT RO

SI

SK

FI

SE

Industry
Trade transport and communication

Building and construction
Finance and business services

(1) Remaining EU countries not included because of missing data.
Source: DG ECFIN AMECO database.

labour  costs
Hungary  and  France  real  unit 
increased, while a number of countries with lower
unemployment rates recorded a decline in real unit
labour costs.

3.2.3. Compensation  per 

employee  at

sectoral level

that 

shows

the  growth 

The  sectoral  breakdown  of  the  compensation  per
in
rate 
employee 
compensation  per  employee  was
somewhat
stronger  in  the  industry in most  countries (Graph
I.3.7). This  pattern  relates  to  the  rebound  in
industry after the collapse of manufacture output at
the onset of the crisis.  However, compensation per
employee in industry  is in  general  more  moderate 
in 2011  compared  with  the  previous  year,  while
broadly  similar  growth  rates  are  observed  in  the
other  sectors.  Overall,  the  recovery in  labour
remunerations  in  manufacturing  helps  shifting
resources 
and
contributes  to  the  re-balancing.  Wage  growth  in
industry  (and  tradable  services,  notably  "trade,
transport  and communication") 
is  particularly
visible in countries having undertaken a successful
re-balancing  process  like  Latvia  and Romania.  In
this countries, it is also visible a recovery in wages
in the construction sector.

activities 

tradable 

towards 

3.2.4. Compensation  per employee  in  private 

and public sector

Spain 

recorded 

The growth rate of compensation per employee in 
the public sector was on average lower than in the
private  sector  in  2011 (see  Graph I.3.8). Ireland,
Portugal,  Slovakia 
a
and
contraction  in  compensation  per  employee  in  the
public  sector.  In  Ireland  and Spain,  compensation
per  employee  in  the  public  sector  is falling,
respectively, for  the  third  and  second  consecutive
years.  The  reduction  results  from measures  taken
by governments  to  reduce  their  fiscal  deficits.  In
Ireland,  the  government  imposed  a  pension  levy 
that came into effect in 2009, followed by further
pay  cuts  in  the  general  public  sector  (inversely
related  to  income  levels)  between  5  and  8%  in 
2010. In Spain the government imposed an average
5% cut in 2010 followed by a pay freeze in 2011.
The  decrease  in  compensation  per  employee  in
Portugal was a consequence of an average 5% cut
on  public  employees  earning above  1500  Euros  a
month.  In  Slovakia,  the  decline  in  compensation
per employee resulted from cuts to reduce the total
wage bill. In Italy, the growth rate in compensation
per  employee  in  the  public  sector was  below  1%,
which resulted from pay freezes and cuts of 5 and 
10% for annual salaries above 90,000 and 150,000
Euros.

in 

compensation  per
Conversely,  declines 
employee in the construction sector are very strong
in  Greece,  a  country  in  the  middle  of  a  major
rebalancing  process,  while  Bulgaria  records  a 
strong absolute growth of wages in this sector.

36

Labour market developments

Part I

Graph I.3.8: Compensation per employee in private and public sector, y-o-y % change, 2011

8

6

4

2

0

-2

-4

-6

BE

CZ

DK

EE

FI

FR

HU

IE

IT

LU

NL

PL

PT

SK

ES

SE

UK EA15

(1) Remaining EU countries not included because of missing data.
Source: OECD.

Public sector

Private sector

Public  sector wages  grew  significantly  above
wages in private sector in Denmark, Hungary, the
Netherlands  and  Sweden.  In  Hungary, the growth
rate  in  public sector wages  was particularly  high
despite  plans  to  freeze  the  total  wage  bill  in  the
public  sector.  While  the  total wage  bill  increased
by less than 1% the number of total employees was
reduced  by  5%.  In  the  United  Kingdom  the  total
wage  bill  declined  by more  than  1%, while  the
number of employee declined by more than 5%.

3.2.5. Decomposition of unit labour costs

Nominal unit labour costs grew moderately in the
euro  area  and  the  EU in  2011  (Table I.3.1).  This
follows  the  record  lows  registered  in  2010  when 
nominal  unit  labour  costs  declined.  The  evolution
of  unit  labour  cost  in  2011  was marked  by  a
nominal
relative  moderate 
compensation  per  employee  and  an increase  in
productivity  at  a  rate  above  1%.  Productivity 
growth  declined  substantially  as  compared  to
2010. However, the strong rebound in productivity
in 2010 benefitted from a base effect related to the
number of hours worked which declined markedly 
in 2009 and pushed productivity down.

increase 

in 

compensation  per  employee  was  about  2%.  The
evolution of nominal unit labour costs in Ireland and
Spain  benefitted  especially from  the  highest and
second highest productivity growth in the euro area.

Table I.3.1:

Decomposition of unit labour costs, y-o-y % 
change, 2011

NULC

Compensation 
per employee

Labour
productivity

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

2.5
1.1
0.2
0.3
1.4
0.8
-4.1
-3.0
-1.9
1.6
1.0
2.0
2.1
-0.2
3.2
4.4
0.8
0.7
1.3
1.8
-0.8
1.7
0.4
-0.6
1.0
-0.8
1.6

3.0
7.3
1.6
1.7
3.0
1.4
-1.4
-3.2
0.8
2.8
1.4
2.0
4.2
3.6
2.0
5.8
0.4
1.7
3.0
5.1
-0.8
3.7
2.0
0.9
2.7
0.8
1.9

0.5
6.1
1.4
1.5
1.6
0.6
2.8
-0.2
2.8
1.2
0.3
-0.1
2.0
3.8
-1.1
1.4
-0.3
1.0
1.6
3.3
-0.1
2.0
1.6
1.5
1.7
1.7
0.2

GDP 
deflator
1.9
5.0
-0.7
0.8
0.8
3.7
-0.4
1.6
1.4
1.3
1.3
2.0
5.4
5.3
4.7
3.5
2.3
1.1
2.1
3.2
0.7
8.1
0.8
1.6
3.6
0.9
2.3

RULC

0.6
-3.7
0.9
-0.5
0.6
-2.8
-3.7
-4.5
-3.2
0.3
-0.3
0.0
-3.1
-5.2
-1.4
0.8
-1.5
-0.4
-0.8
-1.4
-1.4
-5.9
-0.4
-2.2
-2.5
-1.7
-0.7

Nominal  unit  labour  costs  registered  the sharpest
decline  in  Ireland,  which  recorded the  second
consecutive  decline  above  4%.  Greece  and  Spain
also  registered  a  significant  decline  in  unit  labour
costs.  Portugal  and  Slovakia were  the  other  euro
area  countries  to  register  a  decline  in unit  labour
costs, though of a smaller dimension than the other
three  countries.  In  the  euro  area  nominal unit
labour  costs  accelerated  the most  in  Cyprus  and 
Luxembourg,  as  both  countries  recorded  negative
productivity  growth, while  the  growth  rate  in

Source: DG ECFIN AMECO database.

In the non-euro area countries nominal unit labour
costs  registered  small  declines  in  Sweden  and
Lithuania.  In  contrast, nominal  unit  labour  costs
increased  at  a  rate  above  4%  in  Hungary,  the
fastest rate in the EU.

Real unit  labour  costs  declined  for  the  second
consecutive year in the euro area and the EU. This
follows  the  sharp  increase  of  2009.  Romania  and

37

European Commission

Labour Market Developments in Europe, 2012

Lithuania recorded the sharpest declines in the EU,
while Hungary and the Czech Republic recorded a 
positive  growth.  In  the  euro  area  the  sharpest
decline  was  registered  by Greece,  followed  by
Ireland and Spain.

Graph I.3.9: Unit labour costs in deficit and surplus 
countries, euro-area groups weighted 
averages, y-o-y % change

6

5

4

3

2

1

0

-1

-2

9
9
9
1

0
0
0
2

1
0
0
2

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

Deficit countries

Surplus countries

negative  in  Sweden,  while  it was  the  highest  in 
Hungary yet just above 1%.

The other components of the final demand deflator
show that import prices contributed the most to the
overall domestic inflationary pressures in 2011. In
the euro area, the contribution of import prices was
in  Belgium,  Estonia,  Slovakia  and
highest 
Luxembourg.  In  the non-euro  area  countries, the
contribution  of 
domestic
inflationary  pressures was  stronger  in  Lithuania
and  Bulgaria.  The  contribution  of  gross  operating 
surplus  was  the most  important  component to the
increase in final demand deflator in Spain, Latvia, 
Greece  and  Romania.  Finally,  net  indirect  taxes
were  the  lowest  contributor  to  the  increase  in  the
final  demand  deflator  in most Member States,
though the size is relatively large in Romania.

import  prices 

to

Surplus countries are BE, DE, LU, NL, AT and FI.
Source: DG ECFIN AMECO database and Spring 2012 
European Commission Forecast.

Overall, the evolution of unit labour costs in 2011 
is  contributing  to  the  rebalancing  of  external
positions  in  euro-area  countries.  Until  2008,  unit
labour  costs  grew  on  average  at  a  slower  pace  in
countries with  current account  surplus  than  in
deficit  countries  in  the  euro  area.  This pattern
reverted  in  2009,  but  in  2010  ULC  growth  rates
were roughly equal in surplus and deficit countries.
In 2011, ULCs are again growing at slower rate in
deficit  countries,  and  this  process  is  expected  to
accelerate  in  2012  according  to  the  European
Commission Spring 2012 Economic Forecast.

3.2.6. Contributions 
deflator

to 

the 

final  demand

Table  I.3.2 presents  the growth  rate  in  the final
deflator as well as the contribution of its different
components.  The  growth  rate  in  the final  demand
deflator  ranges  from  about 0.5%  in  Sweden  to
about  8.5%  in  Lithuania.  The  contribution  of unit
labour  costs to the  increase  in  the final  demand
deflator is relatively modest and much lower than
the historic average before 2009. In the euro area,
the contribution of nominal unit labour costs to the
final  demand  deflator was negative  in  Greece, 
Ireland, Spain, Portugal and Slovakia. In the non-
euro  area  countries,  the  contribution  of nominal
unit labour costs to the  final  demand deflator  was

Table I.3.2:

Contributions to the final demand deflator, y-
o-y % change, 2011

Import 
prices
3.0
3.4
1.0
1.1
1.5
2.7
1.7
1.6
1.8
1.2
1.6
1.2
1.9
5.3
2.4
2.2
2.2
1.8
2.1
2.3
2.2
2.1
2.2
2.4
2.1
-0.1
1.6

NULC

0.9
0.4
0.0
0.1
0.6
0.2
-1.2
-1.2
-0.8
0.7
0.5
0.8
0.7
-0.1
0.7
1.2
0.2
0.3
0.5
0.6
-0.3
0.7
0.2
-0.2
0.4
-0.3
0.8

Indirect 
taxes
0.0
0.6
-0.1
0.2
0.3
0.5
0.1
0.2
-0.2
0.6
0.2
-0.3
0.8
0.3
0.3
0.0
0.4
-0.2
0.2
0.4
0.2
2.1
0.0
0.1
0.9
0.6
0.7

G. oper. 
surplus
0.2
2.2
-0.4
0.3
-0.3
1.5
0.8
2.3
2.0
-0.3
0.3
0.9
2.1
2.9
1.0
0.8
0.5
0.6
0.7
1.2
0.6
2.9
0.3
1.0
1.3
0.4
0.2

F. demand 
deflator
4.1
6.6
0.6
1.7
2.0
3.8
0.6
2.8
2.8
2.3
2.6
2.5
5.3
8.5
4.4
4.2
3.4
2.5
3.0
4.5
2.7
7.8
2.8
3.2
4.2
0.5
3.4

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

Source: DG ECFIN AMECO database.

3.2.7. Unit labour costs and the tax wedge

Taxes  and  social  security  contributions  drive  a
wedge  between  the  cost for  the  employer  and  the
net compensation received by the employee. Table
I.3.3 shows the  breakdown  of  the  total tax wedge
and  its  evolution  over  the  period  2001-2011.
Belgium,  Germany,  France  and  Hungary  display 
the  highest  tax  wedge.  Belgium has  the  second
highest rate on personal income tax, Germany has
the  second highest  rate  on  employees'  social

38

Labour market developments

Part I

Table I.3.3:

Decomposition of the tax wedge

Of which

Difference 2010 - 2011

Difference 2001 - 2011

Total Tax
Wedge 
2011

Personal
Income 
Tax

Social
Security
Contributions
Employee

Social
Security
Contribution 
Employer

Total Tax
Wedge

Personal
Income 
Tax

Social
Security
Contribution 
Employee

Social
Security
Contribution 
Employer

Total Tax
Wedge

Personal
Income 
Tax

Social
Security
Contribution 
Employee

Social
Security
Contribution 
Employer

AT

BE

BG*

CY**

CZ

DE

DK

EE

EL

ES

FI

FR

HU

IE

IT

LT*

LU

LV*

MT*

NL

PL

PT

RO*

SE

SI

SK

UK

48.4 

55.5 

32.5 

13.9 

42.5 

49.8 

38.4 

40.1 

38.0 

39.9 

42.7 

49.4 

49.4 

26.8 

47.6 

40.7 

36.0 

44.2 

22.4 

37.8 

34.3 

39.0 

44.3 

42.8 

42.5 

38.9 

32.5 

11.9

21.7

7.5

2.1

8.9

15.9

28.0

12.5

3.0

12.0

18.5

10.0

13.6

13.5

16.1

10.0

13.3

17.6

9.2

14.5

5.9

10.9

9.5

13.6

9.6

7.5

14.1

14.0

10.8

10.3

5.9

8.2

17.4

10.7

2.1

12.8

4.9

5.8

9.6

13.6

3.6

7.2

6.9

11.7

7.3

6.6

14.0

15.5

8.9

12.9

5.3

19.0

10.6

8.5

22.6

23.1

14.7

5.9

25.4

16.5

0.0

25.6

22.2

23.0

18.4

29.7

22.2

9.7

24.3

23.8

11.0

19.4

6.6

9.2

12.9

19.2

21.9

23.9

13.9

20.8

9.9

0.2

0.2

-1.3

-0.2

0.4

0.6

0.1

0.1

-0.2

0.1

0.2

0.0

2.8

0.9

0.4

-0.1

1.7

2.0

0.1

-0.3

0.1

1.4

-0.1

0.0

0.0

1.0

-0.1

0.2

0.0

0.1

-0.2

0.4

0.0

0.1

0.1

-0.8

0.1

0.1

0.0

2.4

3.8

0.4

-0.1

0.3

2.0

0.7

-0.1

0.1

1.4

0.3

0.0

0.0

1.0

-0.6

0.0

0.0

-0.7

0.0

0.0

0.3

0.0

0.0

0.3

0.0

0.0

0.0

0.4

-2.9

0.0

0.0

0.7

0.0

-0.3

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.3

0.0

0.1

-0.8

0.0

0.0

0.3

0.0

0.0

0.3

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.6

0.0

-0.3

-0.2

0.0

0.0

-0.4

0.0

0.0

0.0

0.2

1.5

-1.1

-7.9

-6.9

-0.1

-2.1

-5.0

-0.8

3.3

1.0

-3.6

-0.4

-6.4

0.9

1.0

-5.1

0.3

1.0

-1.0

0.4

-3.7

2.6

-3.6

-6.3

-3.7

-3.6

0.3

1.5

-0.3

-1.1

-2.3

1.5

-1.9

-4.5

-3.7

2.5

1.4

-2.6

-1.0

-5.0

2.7

1.7

-9.6

-0.4

2.1

-0.2

4.8

0.5

2.6

1.4

-5.5

-1.5

1.8

-1.6

0.0

0.1

4.1

0.3

-1.1

0.4

-0.1

2.1

0.4

0.0

0.6

0.1

4.7

-0.8

0.3

4.6

1.4

0.1

-0.4

-3.9

-2.8

0.0

3.9

0.1

0.6

1.3

1.0

-0.1

-0.9

-10.9

-5.0

-0.6

-0.6

0.0

0.8

0.4

-0.4

-1.6

0.5

-6.1

-1.0

-1.0

0.0

-0.8

-1.3

-0.4

-0.5

-1.5

0.0

-8.9

-0.8

-2.7

-6.8

0.9

(1) Single person without children, 100% of average wage.
Source: OECD, Taxing wages report. **2007 data *2010 data.

security  contributions  and  France  has  the highest
rate on employer's social security contributions.

the 

the  period  2001-2011, 

Over 
tax  wedge
decreased  in most countries.  Bulgaria, Cyprus,
Hungary,  Sweden,  Lithuania  and  Denmark
recorded the sharpest reductions. In the euro area, 
beyond Cyprus, the tax wedge decreased the most
in  Slovenia,  Slovakia,  Finland and Germany.
Between  2010  and  2011,  Bulgaria  recorded  the
highest  reduction  on  the  back  of  reduction  in 
security
employees'
employers 
contribution.  On 
Portugal,
the
Luxembourg, Latvia  and  Hungary  recorded  the
most significant increases in the tax wedge.

contrary 

social 

and 

3.3. 

PRICE COMPETITIVENESS DEVELOPMENTS

Cost  competitiveness  relative  to  a  group  of  35
industrialised nations improved in most of the EU
Member States over the period 2009-2011 in light
of 
the  productivity  rebound  and  widespread 
moderation  in  wage  dynamics  (Graph  I.3.10). 
Developments were however quite uneven.

the

euro  area,

Ireland  recorded 

Within 
the
strongest  adjustment, with an  18%  cumulative
decline  in  the  REER  over  the period.  Spain  and
Estonia also recorded a decline in REERs of about
8%.  In  Portugal,  Malta  and Greece  REERs had  a 
cumulative depreciation of about 3%. Slovakia and
Slovenia  recorded  instead  an  appreciation  above 
4% in REERs during this three year period.

Among  non-euro  area  countries,  Latvia,  Poland,
Lithuania  and  Hungary  recorded  the  sharpest
depreciation in REERs in the period 2009-2011. In
Latvia  and Lithuania  the  developments in  REERs
were  driven  by strong  downward  adjustment  in 
unit labour costs, while in Poland and Hungary the
depreciation was mostly related to depreciations in
nominal  exchange  rates.  Nominal  exchange  rates
also contribute to explain the variations in REERs
in  the Czech  Republic,  Romania,  Sweden  and  the
United Kingdom in 2009 and 2010.

39

European Commission

Labour Market Developments in Europe, 2012

Graph I.3.10: REERs based on ULC deflator, y-o-y % change

15

10

5

0

-5

-10

-15

-20

K
U

E
S

E
D

I

T S
A

L
P

T
P

I

E F
B

L
N

R
F

L
E

Y
C

T

I

S
E

K
D

T
M

T
L

G
B

U
H

E

I

K
S

V
L

O
R

E
E

Z
C

2009

2010

2011

(1) Belgium also includes Luxembourg.
Source: DG ECGIN AMECO database.

Different measures of REERs evolved in opposite
directions in  a number  of  countries.  Graph  I.3.11
shows the year-on-year evolution of REERs based
on  ULC  deflator,  GDP  deflator  and  export  price
deflator.  This  allows  a  distinction  between  broad
and  narrow measures  of  REERs.  While  REERs
based on ULC and GDP cover the entire economy,
export  prices  deflator  concerns  prices  of  exports
only.  Over  relatively  long  time  horizons,  broad
REERs 
information 
regarding  competitiveness  positions.  But  in  the
short-term they may differ substantially in light of
short-term variations in profit margins and indirect
taxation. Differences may also exist between broad
and  narrow measures  of  REERs.  This may  be
indicative  of  different  price  dynamics  in  tradable 
and  non-tradable  sectors  and composition  of
exports. Graph I.3.11 shows that REERs based on
the different deflators display conflicting signals in
a number of countries.

indicators  convey similar 

REERs  based  on ULC depreciated  more  in  the
euro  area  countries under more  need  to  adjust. In 
Ireland  the  depreciation was  about  5%, in  Spain 
and Greece about 3% and in Portugal about 1%. In 
Germany and Austria REERs appreciated by about
0.5%. Belgium and Cyprus were the only euro area
countries where REERs based on ULC appreciated
by more  than  1%.  Of  the non-euro  area  countries
Sweden,  Bulgaria,  Hungary and 
the  Czech
Republic  recorded  the  sharpest  appreciations.  On
the  contrary, Poland 
the  highest
depreciation.  In  Poland,  the  Czech Republic  and
Sweden the movement in REERs in 2011 seems to

recorded 

40

be  more  related  to  movements  in  exchange  rates
than in nominal unit labour costs.

The  countries with  the  sharpest  depreciation  in
REERs  based  on  ULC  have  not  seen  the  same
adjustment  in REERs  based  on  the  GDP  deflator. 
In Ireland, the depreciation of REERs based on the
GDP  deflator was  below  2% while  in  Spain  and
Greece  appreciated  slightly.  In  Portugal  REERs
based  on  GDP  deflator  depreciated  but  less  than
the  REER  based  on  unit  labour  costs.  In  some
countries  (e.g., Romania, Latvia,  Bulgaria)  price
competitiveness  based  in  terms  of  GDP  deflator
worsened much  more markedly  than  ULC  cost
competitiveness. Conversely,  in  some  countries
(Germany  ,  Belgium,  Czech  Republic,  Cyprus,
Hungary) 
losses
outpaced price competitiveness losses.

labour  cost  competitiveness 

REERs  deflated  by  the  export  prices  deflator
evolved  differently from REERs  based  on  broad
measures. Lithuania recorded the largest difference 
between  the  REER  based  on ULC and  the REER
based on the export deflator. In Germany, France,
Cyprus  the  Czech  Republic  and  Hungary  the
REERs based  on  the  export  deflator  depreciated 
more  than REERs based  on  ULC.  This suggests
that  export  firms  in these  countries have  tried  to
offset the increase in cost competitiveness through
a drop in profit margins, or the unit labour cost in 
export  sectors varied  considerably from  those for
the whole economy.

Overall,  in  2011  countries having  to  rebalance
high
external 

positions

reducing

while 

Labour market developments

Part I

Graph I.3.11: REERs based on ULC deflator, GDP deflator and export prices deflator, % change, 2011 y-o-y and over the 2008-

2011 period.

10

5

0

-5

-10

-15

-20

E

I

L
E

S
E

L
P

K
S

K
D

T
P

T
L

I

T S
M

I

E F
E

L
N

K
U

T
A

T

I

E
D

R
F

O
R

V
L

E
B

Y
C

Z
C

U
H

G
B

E
S

REER based on ULC

REER based on GDP deflator

REER based on exports deflator

2008-2011

2008-2011

2008-2011

(1) Belgium also includes Luxembourg.
Source: DG ECGIN AMECO database.

similar 

competitiveness. A 

unemployment  recorded  in  general  a stronger
adjustment  in  labour  cost  competitiveness  than  in
price 
stronger
adjustment  of  competitiveness  in  terms  of  labour
costs  rather  than in  relative  prices for  deficit
countries  is  observable  over  a  longer  time  frame,
namely, since the start of the crisis (the 2008-2011
period),  as  reported 
in  Graph I.3.11.  While
improvements  in  cost  competitiveness  are  per  se
helpful  to  external  rebalancing,  adjustment  in
relative  prices  are  needed not  only  to  support
export  demand  via  reduced  export  prices  but  also
to induce the necessary shift from the non-tradable 
sector. In the latter respect, a role in fostering price
competitiveness  adjustment could  be  played  by
structural reforms more effectively contributing to
reduce mark-ups in the non-tradable sector.

3.3.1. Competitiveness  and  adjustment  in  the

euro area

In  monetary unions, nominal unit labour costs are
expected to adjust to differences in business cycle
developments.  Hence,  in  the  presence  of  positive
(negative) asymmetric shock, unit labour costs in a
euro-area  country  should  increase  faster  (slower)
than in the rest of the area. This adjustment in turn
favours the rebalancing of cyclical competitiveness
positions via changes in net exports.

Graph  I.3.12 shows  the year-on-year  changes  in
REERs based on ULC and the relative output gap,
calculated as the difference between the output gap
of each individual country with that of the euro area.

Graph I.3.12: REERs based on ULC, y-o-y % change, and 

relative output gap 2011

DE

AT

BE

CY

IT

FR

2

4

MT

EE

0
FI
SI

SK

-6

-4

IE

-2

PT

ES

l

e
c
y
c

.
n
o
c
e
n

i

n
o
i
t
i
s
o
p
e
v
i
t
a
e
R

l

EL

REERs

3

2

1

0

NL

-1

-2

-3

-4

-5

-6

-7

-8

Note: Belgium also includes Luxembourg.
Source: Commission services, based on DG ECFIN AMECO
database.

to  be 

As  expected,  there  is  a  positive  relation  between
the  relative  output  gap  position  and  changes  in
REERs:  countries with the  largest  cyclical  slack
tend 
those  exhibiting  stronger  cost
competitiveness  gains. (16)  Changes  in  REERs
varied  considerably  across countries  in  similar
cyclical  positions.  Ireland,  Greece,  Spain  and
Portugal 
recorded  an  economic  performance
relatively worse  than  that  of the  euro  area  and  all
the
saw 
depreciation  recorded  by  Ireland was  the  largest. 
Germany recorded the best economic performance
in relation to the euro area while France performed
an
relatively worse,  but  France 

their REERs  depreciating, 

recorded 

though 

(16) This  result  is  confirmed  in  empirical  work  on larger 

samples (e.g., Biroli, Mourre, and Turrini, 2010).

41

 
 
 
 
European Commission

Labour Market Developments in Europe, 2012

appreciation  of  REER higher 
Germany.

than that  of

downward  adjustment 
proportionate to the unemployment challenges.

in real wages  seems

The  growth  of  compensation  per  employee  in  the
public  sector was  on  average  lower  than  in  the
private sector. As part of their fiscal consolidation
efforts,  several  governments  imposed wage  cuts
and wage freezes in the public sector; wage cuts in
the public sector were enacted in Ireland, Portugal,
Slovakia  and  Spain;  in  Italy  compensation  per
employee in the public sector grew below 1%. 

stronger 

industry 

Looking  at  the  sectoral  breakdown,  the  growth  of
compensation  per  employee was more  evenly
distributed  across  sectors  than  in  2010.  It was  on 
average 
(excluding
in 
construction)  and  closely  followed  by  the growth
the
rate  of  compensation  per  employee 
construction sector, 
transport  and
in 
communication  and 
in finance  and  business
services. The cross-country pattern of wage growth
in manufacturing appears consistent with external
rebalancing,  with  labour  demand  and wages more
sustained in the tradable sector in countries having
clearly started  or  nearly  completed  a  process  of 
correction of current account deficits.

trade, 

in 

cost  developments 

are 
Also  unit 
labour 
supportive  of
increasingly  following  patterns
external  re-balancing,  with  dynamics becoming
increasingly sustained  in  surplus  countries  and
more muted 
Price 
deficit 
competitiveness  developments,  however,  appear
somehow  delinked 
labour  cost
competitiveness, with  gains  still  having  to  fully
materialise in most deficit countries.

countries.

those 

to 

in 

in 

Graph I.3.13: REERs based on ULC, y-o-y % change 2011 

and current account balance 2010

t
n
u
o
c
c
a

t
n
e
r
r
u
C

IE

-6

-4

-2

ES

EL

DE

AT

FI

FR

IT

NL

EE

8

6

4

2

0

SI

-2

0

SK

MT

-4

-6

-8

PT

REER

-10

-12

-14

4

BE

2

CY

Note: Belgium also includes Luxembourg.
Source: Commission services, based on DG ECFIN AMECO
database.

Apart
from  contributing  to  the  absorption  of
cyclical  divergences,  competitiveness  adjustment
is  also  key  for  the  external  rebalancing  of  the
economies. Graph I.3.13 plots the current account
balance  in  proportion  of  GDP  in  2010  against
changes  in REERs  based  on  ULC  in  2011. The
correlation  between  the  variation  in REERs and
the current account is roughly positive, suggesting 
that  the REER  tends  to appreciate  more (less) in
countries with a current account surplus (deficit). 

3.4.  CONCLUSION

In  2011,  the  dynamics  of  nominal  compensation 
per  employee  started  exhibiting  an  increasingly 
clear  differentiation  between  countries with
stronger  needs 
to  reduce  unemployment  and
rebalance  external  positions  and  countries with  a
more  sustained  recovery  and  current  account
surpluses.

Real compensation per employee declined in about
half  of  the  Member  States.  After  growing  above
in  2009,  real  compensation  per
productivity 
employee in 2011 expanded at a rate below that of
productivity, confirming the trend initiated in 2010
of a declining wage share. The moderation in real
wages is needed for containing unemployment and
is probably under-estimated by aggregated data in
light of rising skill-intensity of employment. Not in
all  countries,  however,  the  speed  and  breath  of

42

 
4.

EU LABOUR MARKET OUTLOOK

After two  years of continued  economic expansion 
following  the  Great  Recession,  the  European 
economy  is  again  losing  momentum  and  an 
expansion  of  economic  activity  is  not  expected 
before 2013. 

Renewed  tensions  in  sovereign  bond  markets, 
protracted  fiscal  consolidation  to  ensure  public 
debt  sustainability,  concerns  regarding credit 
supply  amidst  a  process  of  gradual  deleveraging, 
and  some  moderation  in  growth  in  emerging 
economies, mark the uncertain background for the 
EU economy. 

Hard  data  have  pointed  to  worsening  activity  and 
employment  since  late  2011  and  the  latest  results 
from  business  surveys  point 
to  weakening 
employment  prospects.  This  state  of  worsening 
expectations  could  signal  an  actual  reduction  in 
employment  growth  looking  forward,  as  survey 
results  turn  out  being  a  quite  effective  leading 
indicator in the past, as hinted by Graph I.4.1.

Graph I.4.1:

Employment expectations by the EU 
businesses and actual employment growth

e
h
t

r
o
f

s
n
o
i
t
a
t
t
c
e
p
x
e
t
n
e
m
y
o
p
p
m
e
(

l

x
e
d
n

I

)
d
a
e
h
a

s
h
t
n
o
m

20

10

0

-10

-20

-30

-40

-50

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Services

Industry

Construction

Source: European Commission (DG ECFIN Business and 
Consumer Surveys)

According  to  the  European  Commission  services 
Spring  2012  Forecast,  EU  GDP  is  expected  to 
stagnate  in  2012  and  to  expand  by  1.3%  in  2013. 
In the euro area alone, economic activity is  likely 
to  recede  by  -0.3%  in  2012 before  edging  up  by 
1% in 2013. 

Patterns  of  economic  activity  are  expected  to  be 
highly  different  across  Member  States  in  2012, 
reflecting  different  challenges in  terms  of  private 
and  public  sectors  adjustment  as  well  as  different 
exposure 
international  cycle.  Poland, 
Lithuania  and  Latvia  are  all  expected  to  register 

the 

to 

to 

GDP growth in excess of 2% in 2012. Greece and 
record  notorious 
Portugal  are  projected 
recessions,  while  Spain,  Italy,  Slovenia, 
the 
Netherlands,  Cyprus  and  Hungary  are  also 
expected  to  register GDP falls.  In  2013,  GDP 
growth  is  instead  expected  to  gain  momentum  in 
essentially  all  the  EU countries,  yet  at  different 
speeds.

ahead 

The  background  for  economic  activity  in  the 
quarters 
is  marked  by  heightened 
uncertainty  of financial  and  fiscal conditions  on
individuals  and  firms  decisions.  In  all, 
this 
uncertainty  about  the  pace  of  economic  activity 
can  induce  a  wait-and-see  attitude  on  the  part  of 
firms and compound the effects of falling activity. 
The  fact  that  job  creation  in  2010  and  2011  took 
place  especially  in  terms  of  temporary  and  part-
time jobs surrogates the argument that uncertainty 
on the economic outlook has been playing a role.

The  falling  momentum  in  economic  activity  amid 
increased uncertainty is therefore expected to have 
implications  for  employment.  In  the  EU  as  a 
whole, employment is forecast to decline by 0.2% 
in 2012 and to recover by the same magnitude the 
following year. The outlook for the euro area alone 
is bleaker as employment is projected to decline by 
0.5% in 2012 and to stabilise in 2013. In 2012, the 
unemployment  rates are  expected  to  increase  to 
10.3%  and  11%  in  the  EU  and  in  the  euro  area 
respectively (from 9.7% and 10.2% in 2011) and to 
remain broadly unchanged in 2013. 

The  high  diversity  of  employment  developments 
across  EU  countries  observed  in  recent  years  is 
expected  to  persist  (Table I.4.1).  The  prospects 
remain  poor  in  a  number  of  EU  countries  whose 
labour markets were strongly hit by the crisis. This 
is notably the case of Greece, Spain and Portugal. 
Member States like Bulgaria, Slovenia,  Cyprus or 
Italy  are  also  forecast  to  experience  a  labour 
market  deterioration.  Employment 
rates  are 
expected to increase in Luxembourg, Germany and 
Hungary, all by at least 1% in 2012. Employment 
growth  increases  are  expected  also  in  Austria, 
France, the Baltics and the UK.

Regarding  unemployment  rates,  they  are  likely  to 
be on a downward trend only in a tiny minority of 
Member  States 
in  2012  and  2013,  notably 
Hungary,  Ireland,  Slovakia  and  Germany.  Also  in 

43

 
 
 
 
 
 
 
European Commission

Labour Market Developments in Europe, 2012

Table I.4.1:

Employment growth and unemployment rate forecasts by EU Commission (DG ECFIN), OECD and IMF

Employment (annual percentage change)
ECFIN

OECD

IMF

BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
EA-17
EU-27
US
JP

2011
1.4
-4.2
1.3
-0.5
1.3
6.7
-2.2
-6.7
-2.0
0.5
0.3
0.5
-8.4
2.0
2.3
0.8
2.4
0.6
1.4
1.1
-1.9
-0.9
-3.2
1.5
1.1
1.7
0.5
0.1
0.2
-0.6
-0.4

2012
0.0
-1.9
-0.1
0.1
1.0
0.6
-0.6
-4.8
-3.7
0.4
-0.8
-1.5
0.7
0.6
1.7
1.0
0.6
-0.1
0.4
0.3
-3.3
0.4
-1.7
0.5
-0.1
0.1
0.4
-0.5
-0.2
1.8
0.1

2013
0.4
-0.2
0.2
0.3
0.4
1.2
0.7
-0.2
-1.5
0.4
0.0
0.6
1.2
0.5
1.2
1.4
1.1
-0.2
0.7
0.4
0.2
1.1
-1.0
0.7
-0.1
0.4
0.5
0.0
0.2
0.8
0.1

2012
0.1

2013
0.2

2012
-0.3

2013
0.3

-0.6
-0.1
0.9
1.1
-0.1
-5.0
-4.1
-0.1
-0.3

1.4
-0.1

-0.3
0.5
0.1
-3.9

-3.3
-0.1
-0.1
0.4
-0.2
-0.6

1.8
0.1

0.5
0.2
0.2
0.9
0.3
-1.1
-1.1
0.2
-0.3

1.3
0.1

0.1
0.3
-0.1
-1.2

-2.7
0.7
0.2
0.9
0.1
0.1

1.6
-0.2

-0.1
0.6
0.3
0.5
-1.0
-4.8
-3.2
0.2
-1.1
-0.3

1.8

0.6
-0.6
0.3

-2.5

-2.0
-0.3
0.0
0.1
0.1

1.4
1.4

-0.2
0.6
0.2
0.7
0.7
-0.3
0.1
0.3
0.1
1.0

1.8

1.2
0.7
0.8

0.3

-0.4
0.8
-0.2
3.0
0.7

1.6
0.2

Unemployment (percentage of civilian labour force)

ECFIN

2011
7.2
11.3
6.7
7.6
5.9
12.5
14.4
17.7
21.7
9.7
8.4
7.9
16.2
15.4
4.9
10.9
6.5
4.4
4.2
9.7
12.9
7.4
8.2
13.6
7.8
7.5
8.0
10.2
9.7
8.9
4.6

2012
7.6
12.1
7.2
7.7
5.5
11.6
14.3
19.7
24.4
10.2
9.5
9.9
14.9
13.8
5.3
10.6
6.6
5.7
4.3
9.8
15.5
7.2
9.1
13.3
7.9
7.7
8.5
11.0
10.3
8.2
4.5

2013
7.9
12.0
7.2
7.6
5.3
10.5
13.6
19.6
25.1
10.3
9.7
10.0
13.3
12.7
6.0
9.6
6.3
6.2
4.2
9.6
15.1
7.1
9.4
12.8
7.7
7.7
8.4
11.0
10.3
8.0
4.4

OECD

2012
7.5

2013
7.8

7.0
7.6
5.4
11.4
14.5
21.2
24.5
9.8
9.4

6.3
12.0

5.3
4.6
10.3
15.4

8.8
14.0
7.9
7.6
8.6
10.3

8.1
4.5

6.9
7.5
5.2
10.4
14.4
21.6
25.3
10.0
9.9

6.6
12.2

5.7
4.8
10.6
16.2

9.2
13.5
7.8
7.6
9.0
10.6

7.6
4.4

#

#

IMF

2012
8.0
12.5
7.0
5.8
5.6
11.3
14.5
19.4
24.2
9.9
9.5
9.5
15.5
14.5
6.0
11.5
6.6
5.5
4.4
9.4
14.4
7.2
8.7
13.8
7.7
7.5
8.3
10.9
na
8.2
4.5

2013
8.3
12.0
7.4
5.5
5.5
10.0
13.8
19.4
23.9
10.1
9.7
9.6
14.6
13.0
6.0
11.0
6.5
5.5
4.3
9.1
14.0
7.1
8.9
13.6
7.8
7.7
8.2
10.8
na
7.9
4.4

Source: EU Commission spring 2012 forecast, IMF World Economic Outlook database April 2012, OECD Economic Outlook 
n°91 June 2012. For the euro area figures by OECD, 15 countries are considered (no data for Cyprus and Malta).

the  Baltic  countries unemployment  rates will
continue to fall visibly, from rather elevated levels.
By  contrast,  increases in  the  unemployment  rate
will  approach  or  even  exceed  2 percentage  points
in the cases of Spain, Portugal, Cyprus and Greece. 
In  the  case  of  Spain,  the  unemployment  is
expected to grow substantially not only in 2012 but
also in 2013.

in 

the  forecast unemployment
The  differences 
dynamics  across  countries are  mostly  linked  to  the
multi-speed  recovery.  However,  in  some  cases the
unemployment response to growth is also forecast to
differ  considerably.  Furthermore,  in  a  number  of
countries,  unemployment  patterns  are  expected to
be  driven  by  substantial  structural  relocations
needs:  it  is  not  only  that  labour  demand  for  some
skills will  continue  to  decline,  labour  supply may
not  be  offering  the  skills  demanded  in  the  areas
that are most promising to pull stricken economies
out of  the  recession.  Indeed,  as mentioned  in
Chapter 1, and in Chapter 2 for the case of Spain,
the  recent  shifts in  the  Beveridge  curve suggest  a
worsening labour matching.

Overall,  in  the  absence  of  a  resolution  of factors
underlying  the weakness  of  economic  activity,
notably the  uncertainties  linked  to  the  sovereign
crisis  and  the  associated feed-back  loops  to  the

44

financial and real sector, the process of absorption
of unemployment is likely to be long-lasting.

conditions.  The 

The  speed  at which unemployment will  be  re-
absorbed will also depend, among other factors, on 
the capacity of wages to adjust to prevailing labour
market 
of
compensation per employee in the EU is expected
to remain essentially unchanged in 2012 and 2013
(at  slightly  over 2%),  while for  the  euro  area a 
small  deceleration (to  marginally  below  2%) is 
forecast. 

growth 

rate 

(Graph

the  positive

the  dynamics  of
side, 
On 
compensation per employee are forecast to follow
differentiated  paths
I.4.2).  Nominal
compensation is forecast to grow strongly not only
in  non-euro  area  countries  (e.g.,  Bulgaria,  Poland
and  Estonia)  but  also 
in  surplus  euro-area
countries,  including  Germany,  Austria, Finland.
On  the  opposite, deficit  countries  like Greece,
Portugal, Ireland and Cyprus are forecast to record 
falls
in  average nominal  compensation.  The
reduction  in nominal  compensation  per  employee
in Spain is expected to be rather marginal.

Real wages  are  expected  to  decline  somewhat  in
2012  but 
in  2013.
Nevertheless,  they  are  expected  to  grow  always

to  recover 

losses

those 

Labour market developments

Part I

below productivity in the EU and in the euro area, 
especially  in  2013  when  a cyclical upswing  in 
productivity  is  expected,  following  a  recovery  in 
activity.

Graph I.4.2: Nominal compensation per employee in EU 

Member States (% change)

6

4

2

0

-2

-4

-6

-8

L
E

T
P

E

I

Y
C

I

S S
E

T
M

T

I

K
D

V
L

L
N

Z
C

T
L

R
F

K
S

K
U

E
D

E
S

7
1
-
A
E

7
2
-
U
E

E
B

O
R

I

U F
L

T
A

U
H

E
E

L
P

G
B

Source: Commission services spring 2012 forecasts

2012

2013

With  productivity  losing  steam  in  2012  before
picking up again in 2013, and with little changes in
in  compensation  per  employee  in 2012  and  2013,
nominal unit labour costs for the EU and the euro
area  are  forecast  to  increase  in  2012,  and  to 
decelerate in 2013 for the euro area (Graph I.4.3).

the  euro  area, 

Inside 
the  strongest upward
dynamics are  projected  for  Luxembourg,  Estonia,
Belgium and Germany. On the opposite side, unit
labour costs are expected to decline in a number of
countries, most notably, Greece, Portugal, Ireland,
Spain  and  Cyprus.  The  combination  of  these
patterns  should help  narrowing imbalances  in
external accounts.

Graph I.4.3: Nominal unit labour costs in the EU Member

States (% change)

6

4

2

0

-2

-4

-6

-8

L
E

T
P

E

I

S
E

I

Y S
C

V
L

T
L

K
D

T
M

K
S

7
1
-
A
E

7
2
-
U
E

T

I

Z
C

R
F

L
P

O
R

I

K F
U

L
N

G
B

E
S

E
E

E
D

E
B

T
A

U
L

U
H

2012

2013

Source: Commission services spring 2012 forecasts

45

5.

POLICY DEVELOPMENTS

5.1. 

INTRODUCTION

Recent  years  have  been  characterised  by  an 
exceptionally  intense  reform  activity,  where  the 
large fiscal  stimulus  launched  all  over  the  EU  in 
the  aftermath  of  the  crisis  has  been  subsequently 
followed  by  a  wave  of  structural  reforms  without 
precedents  in  a  number  of  countries.  Largely  due 
to  growing  disparities  in  economic  performance 
and fiscal constraints, and to different institutional 
settings, reform patterns have indeed been diverse 
across the EU. 

into 

This  chapter  provides  an  overview  of  recent 
reform  trends  in  the  EU.  It  first  analyses  the 
overall reform activity since when the crisis started 
to be felt in the real economy. It then looks more in 
detail 
labour  market  measures  adopted 
between  2011  and  the  first  half  of  2012.  Major 
labour  market  reforms  taking  place  in  selected 
countries  are  illustrated  in  depth.  An  attempt  is 
made to assess ex-ante the impact of recent major 
EPL  reforms  on  job  market  flows.  The  chapter 
finally 
forward-looking  perspective 
discussing  priorities  for  further  reform  action 
across the EU, policy recommendations within the 
EU  Semester  and  Macroeconomic  Imbalance 
Procedure  framework,  and  national  policy  plans 
looking forward. 

takes  a 

The  remainder  of  the  chapter is  structured  as 
follows.  In  the  next  section recent  policy  trends 
across  countries  and  policy  areas  are  discussed. 
Section  3  reviews  more  in  depth  the  measures 
passed  in  2011  and  in  the  first  half  of  2012  in  a 

number  of  labour  market  policy  fields.  Section  4 
looks  into  policy  priorities  and  plans  looking 
forward.  Section  5  concludes  by identifying 
desirable reform strategies in the EU.

5.2. 

POLICY TRENDS

The  wave of reforms started  in the second half of 
2008 reflects the exceptional circumstances which 
have prevailed over the last four years, dominated 
by  a  deep  economic  crisis, followed  by  sluggish 
recovery or  recession  in  some  countries and 
uncertain  global  prospects  looking  forward.  The 
overall  reform  intensity  sharply  increased  from 
2008  compared  to  previous  years,  with  a  relative 
higher  increase  in  the  number  of  measures  in  the 
fields  of  training,  social  assistance  and  income 
support, and wage setting.

temporary  measures 

At first, European countries responded with a large 
fiscal stimulus to contain the labour market effects 
of  the  economic  slowdown  and  mitigate  its  social 
impact,  in  line  with  what  recommended  in  the 
European  Economic  Recovery  Plan  of  November 
2008.  Main 
included 
increased support  for  labour  demand  and  job 
creation,  the  full  working  of  automatic  stabilizers 
and their reinforcement where necessary, enhanced 
mechanisms  to  support  job  search  and  labour 
reallocation, and financial support to companies in 
difficulties  to  keep  their  labour  force  in  case  of 
temporary shortfall of demand.

Graph I.5.1: Number of labour market measures by domain, total EU

80

60

40

20

0

Active Labour
Market Policies

Training

Unemployment
benefits

Other welfare-
related benefits

Job Protection
(EPL)

Wage Setting Working Time

Early
withdrawal

Labour
Taxation

Average 2005-2007

2008

2009

2010

(1) * ALMP without training.
Source: Commission services, DG ECFIN LABREF database.

46

Labour market developments

Part I

Box I.5.1: The effectiveness of Active labour market policies: evidence

While  passive  labour  market  policies  are  aimed  at  providing  income  support  to  the  unemployed,  active 
labour  market  policies  (ALMPs)  aim  at improving  the  employability  of  job  seekers  and tackling  the 
mismatch between the supply and demand of labour.

ALMPs  are  carried  out  by  means  of  a  number  of  different  instruments  – including the  provision  of 
information to job seekers and firms, job counselling and activation, training, subsidized employment, direct 
job  creation  in  the  public  sector.  Offices  providing  ALMPs  and  managing  the  available  instruments  are 
above  all  the  public  employment  services  (often  in  cooperation  with  private  employment  services)  and 
public and private training centres.

The  empirical  assessment  of  ALMPs  is  generally  based  on  a  comparison  of  outcomes  (job  finding  rates, 
unemployment  duration,  wage  loss  after  re-employment…)  before  and  after  participation  into  an  ALMP 
programme, and compared with individuals not participating in any programme, controlling for a series of 
other characteristics ("difference-in-difference quasi-experiments", see, e.g., Heckman et al., 1999).

If  effectively  designed  and  managed,  ALMPs  help  to  improve  and  adapt  work  skills,  maintain 
employability,  promote  more  active  search  behaviour  and  also  have  a  screening  function as  they  are 
substitutes for work experience and reduce employer uncertainty about employability. If badly designed and
organised, ALMPs may not only be of limited effectiveness, but could also have a stigma effect.

Empirical  analyses on the effectiveness of  ALMPs point to widely different impacts. In some studies, the 
effect of ALMPs turn out being insignificant or slightly negative, in other cases effects can be quite sizable, 
for  example  with average  annual job  finding  rates being increased  by about  5  percentage  points (e.g., 
Blundell  et  al., 2004). Estimated  effects  of  ALMPs  tend  to  be higher  when  measured  over  longer  periods 
(Card et al, 2010).

A key determinant of the effectiveness of ALMPs in achieving a given objective is the type of instrument 
considered (Kluve,  2010).  However,  also  the  design  of  the  programme  matters.  For  instance,  there  is 
evidence that early participation in activation policies is more effective than programmes started after long 
unemployment  spells.  Moreover,  the  effectiveness  of  ALMPs  needs  to  be  evaluated  conditional  on  the 
specific  population  groups  targeted  and  taking  into  account  the  interaction  with  other  policy  frameworks, 
notably income support policies (ECORYS, 2004, 2008).

Turning to the estimated effects of specific ALMPs instruments:

• Training  is  generally  found  to  have  a  positive  impact  on  the  probability  of  re-employment  and  wage 
prospects, although the effects are often estimated to be quite small (e.g., Heckman et al, 1999). It is also 
found that training tends to be more effective if provided within-firm and in connection to counselling, 
start-up support, wage subsidies (e.g., Martin and Grubb, 2001).

• The  initial  scepticism towards  wage  subsidies (e.g.,  Martin  and  Grubb,  2001;  Boone  and  van  Ours, 
2004) is increasingly replaced by more positive evaluations, possibly partly related to improved design 
of most recent schemes (Card et al., 2010; Estevão, 2007; Dauth et al., 2010). 

• Activation policies, including job search assistance are among the least costly ALMPs and a significant 
impact has been found on the job finding rate (e.g., Blundell et al., 2004) and on unemployment duration 
(Centeno et al., 2009). The effectiveness of this instrument can be enhanced by increased monitoring of 
job-search behaviour and enforcement of work tests (e.g., Martin and Grubb, 2001; Ende et al, 2012).

•

Public jobs programmes are widely considered to be the ALMP with the smallest increase in long term 
employment prospects (e.g., Heckman et al., 1999; Card et al, 2010) and are mostly targeted to hardly 
employable population groups. However, during periods of mass unemployment, temporary and targeted 
public  job  programmes  contribute  to mitigating  the  loss  of  income  while  maintaining  the  link  to  the 
labour market (e.g. Azam et al., 2012).

47

European Commission

Labour Market Developments in Europe, 2012

improve

The majority of policy interventions were intended 
to  increase the  employability  of  those  hit  by  the
the matching  process  and
crisis, 
transitions.
ultimately  facilitate labour market 
Reinforcing activation and supporting employment
by  cutting  labour  cost,  thus  stimulating  labour
demand while keeping  high  the incentives to
remain in the labour market, were also high on the
reform agenda on the aftermath of the crisis.

longer-term 

to  address 

Starting from 2010, growing fiscal constraints, the
need 
labour market
weaknesses  and  large  cumulated  imbalances  in  a 
number  of  countries,  led  to  the  rapid  phasing-out
of  crisis-related  measures  and to an 
intense 
structural  reform  activity,  centred  on  the  need  to
ensure  a  smooth  labour market functioning  and
improved adjustment capacity.

Graph I.5.2:

Percentage change in labour market policy
measures expenditure 2007-2010

0.6

0.5

0.4

0.3

0.2

0.1

0.0

-0.1

-0.2

-0.3

200

150

100

50

0

-50

-100

E
B

G
B

Z
C

K
D

E
D

E
E

E

I

L
E

S
E

R
F

T

I

Y
C

V
L

T
L

U
L

U
H

T
M

L
N

T
A

L
P

T
P

I

O S
R

I

K F
S

E
S

K
U

7
2
U
E

PPS per job-seeker (% change 2007-2010) - right axis

Expenditure on GDP (%, change 2007-2010)

Source: Eurostat, LMP database, LMP categories 2-7

the 

interventions

These  broad  reform  trends  are  largely  captured in
the  LABREF  database. (17) A  simple  count  of
measures by policy area shows a constant increase
in the number of interventions in the field of active
labour market policies (ALMPs). (18) On the other
hand, 
field  of
unemployment  and  other  welfare-related  benefits,
which had seen a pick in the immediate aftermath
of  the  crisis,  started  to  decline  in  2010,  while  the
intensity  of  reform  activity  in  areas  touching  the
labour  market,  such  as
inner
employment protection legislation (EPL) and wage
setting mechanisms,  significantly  increased  in
2010-2011.

functioning  of 

the

in 

(17) http://ec.europa.eu/economy_finance/db_indicators

/labref/index_en.htm

(18) Data for 2011 are still provisional.

48

the 

The  vast majority  of measures  taken  over  the
period 2008-2011 in the field of ALMPs aimed at
supporting employability, improving matching and
enhancing skills.  Most  active  support focused  on 
enhancing  and  expanding 
training  offer,
devising  new  vocational training  strategies, and
improving 
via
strengthened  apprenticeship  and  training  schemes.
Wage subsidies were reinforced in a limited number
of countries and less attention was paid to direct job
creation  schemes,  a shift  that could  reflect  inter-alia
growing  evidence  on  the  different  effectiveness  of
ALMP instruments (see Box I.5.1).

school-to-work 

transition

Graph I.5.3:

Percentage change in out-of-work income 
maintenance and support 2007-2010

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

500

400

300

200

100

0

-100

E
B

G
B

Z
C

K
D

E
D

E
E

E

I

L
E

S
E

R
F

T

I

Y
C

V
L

T
L

U
L

U
H

T
M

L
N

T
A

L
P

T
P

I

O S
R

I

K F
S

E
S

K
U

O
N

7
2
U
E

PPP per job seeker (% change 2007-2010) - right axis

 Expenditure on GDP (%, change 2007-2010)

Source: Eurostat, LMP database, LMP categories 8-9

Despite the noticeable reform activity in this field,
public  expenditure  in  ALMPs  per
job-seeker
declined  slightly  on  average  over  the  period. This
general trend hides huge disparities across Member
States, with countries such as Bulgaria, Lithuania,
Romania,  Ireland  and  Spain, most  of  them  hit  by 
record  unemployment  levels,  registering  a  sharp
reduction of resources per job seeker. This can be 
largely  explained  by  the  steady  increase  in  the
take-up  of  active  labour market  policies since  the
start  of  the  crisis,  coupled in  some  cases with
capped  or reduced  funds  or with the need  for
increased  efficiency,  to  face  growing  budgetary
constraints.

and 

By  contrast,  expenditure  on  out-of-work  income
maintenance 
almost
support
everywhere in the EU,  with a few picks both as a 
percentage  of  GDP  and  per  person  in  countries
with  the  highest unemployment  surge,  such  as
Ireland, Spain and Italy. 

increased 

Reform intensity in the field of unemployment and 
other  welfare-related  benefits  was  overall  stable 
over  the  period  2008-2011,  yet  with  different 
in  2008-2009  most 
policy  priorities.  While 
measures were  aimed  at  increasing  the  generosity 
and coverage of the system, in 2010 and 2011 they 
turned  into  reducing  generosity  and  tightening 
eligibility conditions. Most interventions in means-
tested and other  welfare-related benefits, aimed at 
reinforcing  social  assistance  and  other  income 
support  mechanisms,  were  indeed recorded  in 
2008 and 2009. 

Short-time  working  schemes  have  emerged  as  a 
new  feature  to  support  companies  faced  with  a 
shortfall in demand. In particular, newly designed 
introduced  on  a 
schemes  which  had  been 
temporary basis in the aftermath of the crisis have 
become  a  permanent  feature  of  labour  market 
institutions  in  a  number  of  countries  (e.g.  Czech 
Republic,  Spain,  Sweden  and  Belgium  for  white-
collars, following measures adopted in 2011).

As  compared  to  2008-2009,  significantly  fewer 
measures  were  adopted  in  2010  and  2011  in  the 
field  of  labour  taxation.  This  could  be  due  to  the 
high  number  of  fiscal  measures  which  had  been
enacted  immediately  after  the  crisis  to  sustain 
labour demand. EPL and wage setting reforms saw 
an  unprecedented  boost  in  2010-2011,  and  were 
largely concentrated in countries with major labour 
market problems and macro-economic imbalances.

Regarding  cross-country  patterns  of  reform,  in 
countries  with  positive  employment  prospects but 
with  structural  labour  market  weaknesses,  crisis-
related  measures  have  been  largely  discontinued 
while reforms have started to be enacted in specific 
policy  areas  considered  as  bottleneck  to  higher 
employment.  However,  the  reform  process  has 
been in some cases irregular, with more piecemeal 
and less incisive interventions.

In  contrast,  comprehensive  reform  packages  have 
been  introduced  in  countries  with  serious  fiscal 
and  macroeconomic  imbalances  targeting  several 
policy areas simultaneously to reap the benefits of 
reform  complementarities. 
the 
accession  of  countries  to  multilateral  financial 
assistance programmes has provided for ambitious
structural  labour  market  reforms.  The  scope  for 
implementing  announced 
new  measures  or 

In  particular, 

Labour market developments

Part I

measures  has  been  to  some  extent  affected  by 
fiscal consolidation needs. 

5.3. 

POLICY ACTION SINCE 2011

The  overall  policy  trends  which  had  emerged  in 
2010  have  been  confirmed  in  2011.  Policies  to 
sustain  labour  supply,  encourage  labour  demand 
and  facilitate  transitions  to  work  have  remained  a 
focal  strategy  to  prevent  unemployment  from 
becoming  entrenched.  In  addition,  unprecedented 
measures  in  the  area  of  employment  protection 
legislation  have  come  to  the  forefront  to  support 
labour market dynamics and reduce labour market 
segmentation.  These  reforms  have  been  to  some 
extent  complemented  with  measures  to  enhance 
internal  flexibility  while  bold  reforms  of  wage 
setting 
greater 
decentralisation  and  higher  wage  flexibility  have 
mitigated  the  adjustment  of  labour  input.  New 
reforms  of  unemployment  benefit  systems  have 
supported  transitions  back  to  work,  primarily  by 
adjusting  the  design  of  unemployment  benefits 
over the unemployment spell and in some cases by 
strengthening job-search conditionalities. (19)

mechanisms

towards 

Active Labour Market Policies

Activation and job-search assistance policies have 
remained one of the most widely used instruments 
to fight  unemployment. New  strategies and action 
plans  have  been  devised  to  improve  matching,  by 
focusing  on  reinforced  individual  support  and  an 
early  activation  (e.g. Finland,  France,  Spain, 
Portugal, 
Sweden, 
Luxembourg),  especially  of  the  young  and  long-
term  unemployed,  and  in  some  cases  of  workers 
from  specific  sectors  particularly  hit  by  the  crisis 
(e.g. Spain). 

Denmark, 

Ireland, 

To  improve  efficiency,  several  countries  have 
adapted the  institutional  network  in  place  to 
support  the  unemployed,  notably  by  reorganising 
the  public  employment  services
(e.g.  Czech 
Republic,  Spain,  Hungary,  Ireland,  Belgium), 
increasing  staff  capacity  (e.g.  France,  Sweden), 
setting-up  a  one-stop  shop  (e.g.  Czech  Republic, 

(19) Information  reported  in  this  section  are  based  on  national 
sources,  ECFIN  staff,  and  various  issues  of  European 
Employment Observatory, Quarterly Reports. 

49

European Commission

Labour Market Developments in Europe, 2012

Hungary,  Ireland),  decentralising  activation  (e.g. 
Finland,  Belgium)  or  outsourcing  it
to  private 
employment agencies (e.g. Czech Republic, United 
Kingdom,  Slovakia).  Further  measures  include 
tighter  conditionality  of  benefits  with  respect  to 
accepting a job offer, public works or training (e.g. 
Ireland, Spain, Hungary and Czech Republic).

to  support 

Employment incentives have continued to be used 
extensively 
labour  demand  and 
recruitment  of  specific  vulnerable  groups.  Newly 
introduced  or  scaled-up  wage subsidies and  tax 
incentives  to  employers  have  been  decided  in 
many  countries  (e.g.  Cyprus,  Spain,  Belgium, 
France,  Latvia,  Greece,  Sweden,  Bulgaria, 
Hungary,  Luxembourg),  often  conditional  upon 
new  hires,  and  targeted  at  specific  and  less 
employable  demographic  groups  such  as  young, 
long-term  unemployed,  older  persons,  ethnic 
minorities or foreign-born residents and mothers. 

few  countries 

In  contrast,  a 
scaled  back 
employment  incentives  for  the  unemployed  (e.g. 
Denmark). Direct job creation schemes  have been 
less  important,  except  in  some  countries  (e.g. 
Hungary, Latvia), while new measures emerged to 
support  the  unemployed  to  start  to  work  as  self-
employed (e.g. Austria, Belgium, Czech Republic, 
United Kingdom). 

Training and life-long learning

A  wide  range  of  measures  have  been  adopted  to 
enhance  the  training  offer,  there  including  at  the 
workplace,  so  as  to  better  adapt  the  skills  of 
workforce  to  labour  market  needs  and  facilitate 
labour  adjustment.  New  training  schemes  for  the 
unemployed  have  been  introduced  and  existing 
ones have been adapted, by revising training needs 
and priority areas, extending the training coverage 
and  increasing  financial  support  (e.g.  Greece, 
Lithuania,  Sweden,  Spain, Latvia,  Luxembourg, 
Bulgaria, Estonia, Denmark, Ireland, Belgium and
Germany).  To  ensure  that  the  unemployed  can 
better  build  a  link  with  the  labour  market,  many 
countries  have  announced  or  expanded  existing 
work  experience,  internship  and  apprenticeship 
schemes 
in  private,  public,  community  or 
voluntary  sectors  (Sweden,  France,  Italy,  United 
Kingdom,  Ireland,  Latvia,  Estonia,  Luxembourg, 
Spain  and Denmark),  targeting  above  all  specific 
groups  such  as  the  young  and  the  unemployed. 
Some  measures  have  been  also  introduced  to  up-

50

skill  employees,  by  strengthening  their  rights  to 
training  at  work  and  taking  leave  from  work  for 
training purposes (e.g. Spain).

Participation-friendly schemes

Keeping  labour  market  attachment  of  specific 
groups has remained high on the policy agenda. A 
variety of measures have addressed bottlenecks for 
women  to  participate  in  the  labour  market,  by 
providing  tax  incentives  on  income  from  work 
(e.g.  Italy,  Malta,  Hungary,  Austria)  and  making 
childcare  facilities more  available  (e.g.  Austria, 
Malta,  Hungary,  Luxembourg).  In  contrast,  a 
refund  of  childcare  costs  was  reduced  in  the 
Netherlands.  Targeted  measures  have  been  also 
introduced  or  announced  to  increase  employment 
of  the  disabled  (e.g.  France,  Slovenia,  Denmark, 
Czech  Republic)  and  to  keep  older  persons  either 
employed  or  attached  to  the  labour  market  (e.g. 
Austria, Poland, Germany).

Unemployment benefits

security. 

the  unemployment  spell 

A  major  overhaul  of unemployment  benefit 
systems  has been decided in  some countries,  with 
the aim either to address insufficient incentives to 
take-up work while supporting fiscal consolidation 
plans, or  to  improve  income  stabilisation  and 
income 
Incentive-friendly measures 
include reduction in the maximum level of benefits 
(Portugal,  Slovenia),  adaptation  of  the  design  of 
(e.g. 
benefits  over 
Portugal,  Belgium,  Slovakia,  Slovenia,  Finland), 
cuts
in  benefit  duration  (Portugal,  Hungary, 
Slovakia,  Finland),  and  stricter  eligibility  criteria 
(Czech  Republic). 
In  contrast,  consumption-
stabilisation  measures  are  extending  benefit 
coverage  to  new  groups  of  workers  in  Italy  and
Portugal,  temporarily  lengthen  benefit  duration  in 
Denmark and increase benefit generosity as part of 
a  comprehensive  reform  of  the  unemployment 
benefit system in Italy (as of 2017). The possibility 
of  drawing  unemployment  benefits  and  income 
from  work  was  introduced  to  support  labour 
integration  of  specific  categories  of 
market 
unemployed  in  Belgium  and  France,  while  a 
similar scheme was abolished to limit its misuse in 
the Czech Republic. 

Labour taxation

The tax wedge has increased in most countries due 
to  pressing  needs  to  consolidate  public  finances, 
although  targeted  tax  reductions  helped  to  boost 
work  incentives  of  specific  groups.  Around  one 
half  of  Member  States  have  changed  personal 
income  taxes  since  2011. Personal  income  taxes 
have  been  increased  in  some  countries,  especially 
in  the  form  of  surcharges  on  high  income  earners 
and  often  only  on a  temporary  basis (Belgium, 
Greece,  Italy,  Cyprus,  Luxembourg,  Portugal, 
Spain),  while  in  others  they  have  been  reduced 
(e.g.  Hungary,  Latvia,  Finland,  Germany),  mainly 
to  boost  work  incentives  of  specific  vulnerable 
groups,  notably of  parents  (Hungary,  Malta, 
Germany)  and  of  low  to medium  income  earners 
(Belgium,  Finland, 
the 
Netherlands). As a result, income tax progressivity 
has  increased.  Social  security  contributions  have 
increased in many countries, mainly as a result of a 
hike  in  standard  rates  (Greece,  Latvia,  United 
Kingdom) or in rates for specific groups (Bulgaria, 
France, Hungary, Poland, Austria, Portugal), or on 
account  of  a  broader  tax  base  (Cyprus,  Slovakia). 
Targeted cuts in social security contributions were 
decided in Spain and other countries to support the 
employment  of  young  people  and 
long-term 
unemployed.  Germany  reduced  social  security 
contributions across the board. 

Ireland,  Hungary, 

Job protection 

The  reform  activity  in  the  area  of  employment 
protection legislation  has  been  sustained,  notably 
in countries with strong need for facilitating labour 
market  adjustment  and  with  rigid  employment 
protection legislation. 

A number of countries have introduced changes to 
individual  and  collective  dismissals under  the 
pressure  of  mass  unemployment  and  a  highly 
segmented  labour  market. Main  reforms  include 
increased  probationary  periods  (e.g.  Romania,  
Slovakia),  eased dismissal 
Italy, 
Portugal,  Spain),  clearer  and  broadened scope  of 
justified dismissals (e.g.  Spain, Portugal), reduced
costs of dismissals and uncertainty related to both 
justified  dismissals  (e.g.  Portugal,  Spain,  Greece, 
Slovakia,  Czech  Republic,  United  Kingdom)  and 
unjustified  dismissals  (e.g.  Portugal,  Spain,  Italy). 
Additional 
also 
concerning "staff  loans"  between  employers  that 

flexibility  was 

introduced 

rules 

(e.g. 

Labour market developments

Part I

allow companies facing cyclical difficulties to find 
other companies to take on some of their staff on a 
temporary basis (e.g. France). 

to 

the  regulation  of

With  regard 
temporary 
contracts,  the  purpose  of  reforms  has  been  either 
to inject more flexibility on the labour market or to 
limit their abuse and thus contain problems related 
to  labour  market  segmentation.  Access  to  fixed-
term  contracts  has  been  facilitated,  by  extending 
their  scope  (e.g.  Romania,  Lithuania), 
their 
duration (e.g. Romania, Slovakia, Czech Republic) 
and  the  number  of  allowed  renewals  (e.g.  Czech 
Republic,  Slovakia),  by 
reducing  costs  of 
dismissals (e.g. Lithuania) and aligning them with 
those  of  permanent  contracts  (e.g.  Portugal),  and 
by  easing  the  regulation  of  temporary  work 
agencies 
(e.g.  Romania,  Malta,  Lithuania, 
Slovakia).  In  contrast,  the  use  and  abuse  of 
temporary  contracts  has  been  discouraged,  on 
account  of  restrictions  upon  chaining  fixed-term 
contracts 
Italy),  higher  social  security 
contributions (e.g. Italy) and limitations on the use 
of  other  a-typical  contracts  and  non-dependant 
work (e.g. Italy, Malta).

(e.g. 

Collective bargaining

level 

(Romania),  applying 

Changes  in  collective  bargaining  structures  and 
wage  setting  arrangements  have  been  largely 
supportive of rendering  wages  more responsive to 
economic conditions at firm level. Measures taken
towards  decentralisation  of  collective  bargaining
include  the  ending  of  collective  bargaining  at 
national 
sectoral 
collective agreement to signatory parties only (e.g. 
Romania,  Greece),  the  predominance  of  firm 
level/lower level collective agreements over higher 
levels  (e.g.  Spain,  Greece),  new  criteria  on  trade 
union  representativeness  (Italy,  Romania)  and  on 
the  validity  of  company-level  agreements  (Italy), 
and the  possibility  of  opting-out  from  law  and 
national  collective  agreements  (Italy).  In  addition, 
wage  flexibility  has  been  supported  by  temporary 
restrictions 
the  wage 
indexation  system in Luxembourg  and Cyprus. 
Other relevant measures include a modification of 
the  arbitration  system  in  Greece,  a  cap  on  the 
extension  of  expired  and  not  renewed  contracts 
(e.g.  Spain,  Greece),  changes  in  the  system  of 
consultation  with  social  partners  (e.g.  Hungary, 
Romania) and revised legal provisions with regard 

the  application  of 

to 

51

European Commission

Labour Market Developments in Europe, 2012

to  collective  bargaining  in  certain  sectors  with 
sizeable numbers of low-paid workers in Ireland. 

Early retirement

cross-industry 

The climate for social dialogue was tense in some 
countries,  leading  to  difficult  negotiations  for  the 
renewal  of 
agreements  over 
potential  wage  increases  (e.g.  Belgium)  and  on 
minimum wage rates (e.g. Slovakia). In Finland, a 
tripartite framework for a new centralised national 
agreement on wages and working conditions could 
be reached thanks to government's support via tax 
reliefs in exchange for moderate pay increases.

Statutory minimum wages

Access  to  early  retirement  schemes  has  been 
restricted and  measure  adopted  to  support  the 
employment  of  older  persons.  Early  retirement 
schemes are to be either withdrawn (e.g. Hungary) 
or 
limited  (e.g.  Denmark,  United  Kingdom, 
Austria, Finland, Spain), depending in some cases
on  the  sector  (e.g.  Belgium).  Several  measures 
increase the  costs  of  early  retirement,  by  making 
social security contributions  dependant on the age 
of  the  beneficiary  (e.g.  Belgium)  and  cutting 
retirement benefits (e.g. the Netherlands, Austria).

In  countries  with  very 
large macroeconomic 
imbalances,  the  minimum  wage  has  been  cut 
(Greece),  remained  largely  unchanged  (Czech 
Republic,  Latvia,  Portugal,  Ireland)  or  increased 
by  a  lower rate  than  previously  agreed  (Poland). 
Few countries decided an increase in the minimum 
wage  as  an  instrument  to  combat  poverty  (e.g. 
Bulgaria, Luxembourg). The youth minimum wage 
has remained frozen in the United Kingdom while 
the  other  rates  have  increased  by  less  than 
inflation.  Germany  has  introduced  the  minimum 
wage for  certain  sectors  (e.g.  temporary  agency 
work). 

5.4. 

POLICY  PRIORITIES  AND PLANS  LOOKING 
FORWARD

the  backdrop  of  persistently  weak 
Against 
economic  perspectives, 
large  macroeconomic 
imbalances  in  a  number  of  countries, worsening 
labour  matching and  sluggish net  job  creation,  the 
emphasis  of  policy  making  is  more  than  ever  on 
labour  market 
structural  measures  supporting 
and 
growth 
enhancing 
and 
adjustment 
competiveness. 

EU policy recommendations

Working time regulation

to 

time  arrangements,  by  adapting 
regulation 

Internal  flexibility  has been  largely  used  as  a  tool 
to  complement  flexibility  on the external  margin 
and 
increase  employment  among  specific 
groups. Several countries introduced more flexible 
working 
the 
overtime 
(e.g.  Portugal,  Romania, 
Greece,  Hungary,  Slovakia,  Czech  Republic),
promoting  part-time  contracts 
(e.g.  France),
changing  the  regulation  of  short-time  working 
schemes (e.g. Portugal, Italy), introducing working 
(e.g.  Luxembourg,  Slovakia),
time  accounts 
introducing job sharing (e.g.  Slovakia) and giving 
more  margins to  employers  to  change  working 
time arrangements (e.g. Spain, Romania). In some 
time 
countries,  more 
arrangements  have  been  decided, aimed  at  better 
reconciling work  and  family  life  (e.g.  Italy, 
Hungary, United Kingdom).

flexible  working 

52

while 

labour

Along  these  lines,  the  Annual  Growth  Survey for 
2012  gives  priority  to  reform  measures  that  help 
mobilising 
improving 
competitiveness  and  supporting  structural  change 
towards dynamic sectors. In order to counteract the 
effects of the crisis on the EU social tissue, action 
is  also  urged  to  sustain  living  standards  and 
improve  the  effectiveness  of  social  protection 
systems. 

In particular, policy measures should aim at: 

• Moving  forward  with  the  implementation  of 
the agreed recommendations on revising wage-
setting mechanisms;

• Prioritising growth-enhancing expenditure such 
as  education and  ensuring  the  efficiency  of 
such spending. Further adapting education and 
training systems to better reflect labour market 
conditions; 

Labour market developments

Part I

Table I.5.1:

Country-Specific Recommendations 2012-2013 by country and labour market field

Wage 
setting

X

X

X

X
X
X

X

X

X

X

10

Tax on 
labour
X
X
X

X
X

X
X

X
X
X

X

X

X

13

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

Welfare-related 
benefits

Active labour market
policies

Labour market
participation
X

X

X

X
X

X

X

6

X
X
X
X
X

X
X

X
X
X
X
X
X

X
X
X
X
X
18

X
X
X
X
X
X
X
X
X
X

X
X
X
X

X
X
17

Source: Council Recommendations, OJ C219 (2012).

Early retirement and 
Pension systems
X
X
X
X
X

X

X
X
X

X
X

X
X
X

X
X

16

Education EPL

Poverty and social 
exclusion

X

X
X
X
X
X
X
X
X

X
X

X
X
X
X

X
X
X
18

X

X

X
X

X
X

X

7

X
X

X

X

X

X

X
7

• Promoting 

quality 

apprenticeships 

and
traineeships,  and  paying  particular  attention  to
vocational 
tertiary  education
in 
systems;

training 

•

Increasing the  effectiveness  of  activation
policies,  training and  support  schemes,  and 
adapting unemployment benefit schemes where
necessary;

• Reforming  employment  protection  legislation,
so as to provide easier labour market access to
those left outside, in particular young people; 

• Restricting access to early exit pathways while 

supporting longer working lives;

• Enhancing 

labour mobility  and  promoting 

business creation and self-employment.

The  country-specific  recommendations
(CSRs)
agreed  for  2012-2013 within  the  EU Semester
Framework  (Broad  Economic  Policy  Guidelines
the
and 
Macroeconomic 
largely 
Imbalance  Procedure
reflect these broad policy guidelines. (20)

Employment  Guidelines) 

and 

Many  recommendations  deal with  creating  the
conditions
levels  of  employment,
increasing participation and keeping people in the 

for  higher 

(20) The Country-Specific Recommendations 2012-2013 can be
downloaded  from: http://ec.europa.eu/europe2020/making-
it-happen/country-specific-recommendations/index_en.htm

labour  market. Belgium, Estonia, 
Italy and
Slovakia have  been  recommended  to  pursue/
complete  the  reform  of  their  unemployment  and
social  benefit  systems, while Belgium,  Bulgaria, 
Cyprus,  Czech  Republic,  Estonia,  Spain,  France, 
Hungary,  Latvia,  Lithuania, Slovakia and Sweden
will  have  to step-up  their  activation  and  training
policies  and/  or  to  increase  the  coverage,  quality
and/or  effectiveness  of ALMPs.  Progress 
in
expanding affordable childcare and dependent care 
facilities, reducing pay gaps and improving the tax 
treatment  of  second  earners has  been  considered
insufficient 
the
increase 
participation  of women  in  the  labour market  in
Austria,  Germany,  Hungary,  Italy,  Malta,  the
Netherlands and Slovakia (Table I.5.1). 

significantly 

to 

is 

on

in 

and

field 

focus 

fighting 

training, 

youth
Particular 
unemployment, with recommendations on reducing 
early  school  leaving and  improving  vocational
education 
developing 
apprenticeships and enhancing the effectiveness of
ALMPs. Action 
is  considered
this
insufficient and needs to be stepped up in Bulgaria, 
Cyprus,  Estonia,  Spain,  France,  Italy,  Lithuania, 
Luxembourg,  Latvia,  Malta,  Poland,  Sweden, 
Slovakia and  United  Kingdom. From  its  part,
Finland is asked to implement on-going measures.
Austria,  Spain,  Hungary,  Italy,  Latvia and the
United  Kingdom have  also  been  addressed  a
specific recommendation concerning young people
neither  in  employment,  education  or  training
(NEET). 

53

European Commission

Labour Market Developments in Europe, 2012

Box I.5.2: Labour market reforms in selected countries

Several  countries  have  recently  carried  out comprehensive  and  unprecedented  reforms  of  the  employment 
protection  legislation  (EPL),  the  unemployment  benefits system,  the  organisation of  working  time,  wage 
bargaining,  and  active  labour  market  policies. In  some  countries,  these  reforms  were  implemented  in  the 
context of financial assistance programme by the EC-IMF; in others governments introduced long-awaited 
reforms to enhance labour market functioning.

Greece

The reform of the EPL shortened notice periods for white collars, in particular for job tenure longer than 10 
years, and reduced severance payments. The probationary period has been increased from 2 to 12 months, 
the longest trial period in the EU with that of the UK and Ireland; with the new legislation, an open-ended 
contract can be terminated within the first 12-months of trial period without notice and dismissal pay. The 
maximum  cumulated duration of temporary contracts has been increased  from 24 to 36 months (the same 
duration as in Germany, Italy and Slovakia). The maximum period under temporary working agencies has 
been  increased  from  12  months  to  3  years.  The  definition  of  collective  dismissal  has  been  changed  by 
increasing  the  threshold  number  of  employees  that  have  to  be  made  redundant  to  initiate  a  collective 
dismissal  procedure.  The  reform  of  the  collective  bargaining has  suspended  the  extension  of  occupational 
and sectoral collective agreements to non-signatory parties and favourability clauses of sectoral agreements 
over  firm-level  collective  agreements  have  been  suspended.  Firm-level  wage  bargaining  was  further 
facilitated  by  allowing  workers'  representatives  to  negotiate  firm-level  collective  agreements.  Collective 
agreements can be concluded for a maximum duration of 3 years and the regime of "after effects" has been 
revised,  so  that expired  agreements  will  remain  de-facto  in  force  for  maximum  of  3  months,  after  which 
some  allowances  will  be  suspended  until  a  new  contract  is  signed.  The  reform  of  the  collective  dispute 
resolution procedures  ensure  symmetric  access  of  employers  and  employees'  representatives  to  a  board  of 
mediation  and  arbitration  freed  by  government  influence. The  minimum  wages  were  reduced and  sub-
minima wage was introduced for those younger than 25 years. Concerning working arrangements, overtime 
premium was reduced by 20% and more opportunities created for flexible working time arrangements. 

Spain

Following  the  process  initiated  with  the 2010  reform,  the  2012  EPL  reform  has  reduced  the  severance 
payment for unjustified dismissals from 45 to 33 days per year of service, up to a maximum of 24 months; 
limited  workers'  claim  of  back  pay  only  when  the  employer  opts  for  reinstatement;  introduced  a  detailed 
specification  of  the  conditions  for  justified  dismissals stating  that  the dismissal  is  justified  when  the  firm 
experiences or expects a reduction in the level of sales for 3 consecutive quarters; eliminated the "express 
dismissal";  introduced  a  new  open-ended  contract  for  SMEs  with  less  than  50  employees, with  hiring 
incentives for firms keeping the worker for at least 3 months and longer trial period (1 year); removed the 
prior administrative authorisation for collective dismissals.  To tackle segmentation, chaining of temporary 
contracts will be limited to 24 months, as from 2013. Internal flexibility is also significantly increased, by 
giving  more  flexibility  to  the  employer  to  modify  the  terms  of  the  contract  and  re-assign  the  worker  to 
different tasks if justified by technical, economic and organisational reasons. The wage bargaining system 
implemented was modified by giving more prevalence to firm-level collective agreements over higher level 
agreements,  easing  use  of  opt-out  clauses,  reducing the  survival  of  collective  agreements  expired  and  not 
renewed to a maximum of one year. ALMPs are being revamped to increase their effectiveness and enhance 
workers'  employability.  Job  search  conditionality  has  been  strengthened  and  access  to  apprenticeship 
contracts eased. Temporary work agencies will be allowed to compete with public services.

Ireland

The reform of the bargaining system tackled rigidities of the Employment Regulation Orders (sector-specific 
regulations  issued  by  the  Labour  Court  -  EROs)  and  Registered  Employment  Agreements  (collective 
agreements  extended  to  non-signatory  parties  once  registered  with  the  Court  - REAs),  which  set  sectoral 
minimum wages and working conditions above national standards. The reform provides targeted abolition of 
some  EROs  and  reduces  greatly  the  number  of  minimum  wages.  EROs  will  no  longer  deal  with  terms  of 
employment  covered  by  existing  legislation  (e.g.  compensation  for  working  on  Sundays); when  setting 

(Continued on the next page)

54

Labour market developments

Part I

Box (continued)

minimum  wage  rates, the  Court will  be  required  to  consider  economic  conditions  such  as  unemployment, 
wage  trends,  and  international  competitiveness.  Regarding  REAs,  the  aim  is  to  establish  a  time-bound 
process  by  which  its  terms  may  be  adapted  to  changing  economic  circumstances  without  consent  of  all 
parties and to clarify representativeness criteria to register a REA. Companies in financial distress will be 
able  to  deviate  from  EROs  and  REAs.  A comprehensive  reform  aims  at  enhancing  incentives  to  join  the 
labour force and for job search activities. Key features of this reform include: more efficient administration 
of  unemployment  benefits,  social  assistance,  ALMPs,  and  vocational  training;  enhanced  conditionality  on 
work and training availability; strengthened activation, via better identification of job seekers' needs, more 
effective monitoring and use of sanctions for beneficiaries not complying with job-search conditionalities.

Italy

Recent social partners' framework agreements and legislative acts have given more prominence to firm-level 
bargaining. Agreements allowed derogations from sectoral contracts at company level and set rules on the 
certification of representativeness for participation in industry-wide bargaining at national level and on the 
validity  of  company  deals.  In  2011,  a  Government  act  allowed  derogations  from  labour  law  on  various 
issues,  including  dismissal  procedures.  Tax  burden  on  older  workers  was  reduced and  retirement  age 
increased. A new Act on Apprenticeships aims at better regulating and simplifying apprenticeship contracts. 
In 2012, a comprehensive reform modified the legislation on individual and collective dismissals, introduced 
measures  to  fight  labour  market  segmentation  and  reformed  the  social  safety  net.  The  EPL  reform  has 
reduced the notice period and eased the administrative procedures for individual notice; reduced the scope 
of reinstatement in case of unfair dismissal and capped the back-payment of wages lost during the period of 
a labour trial; abolished the mobility lists, thereby reducing the monetary costs that firms had to incur when 
recurring to the collective dismissal procedure; reduced the opportunity of reinstatement in case of dismissal 
for  procedural  vices;  discouraged  the  use  of  temporary  and  semi-dependent  work  contract  through  higher 
social security contributions and stricter conditions for the use of these contracts. The reform of the safety 
net has unified the fragmented system of unemployment benefits, extending the coverage and generosity of 
previous  system and  enhancing  its  insurance  dimension;  the  wage  supplementation  scheme  for  financing 
short-term working schemes keeps its original role, but its coverage is extended while the scope is limited.

Portugal

The reform of the EPL has cut severance payments and eased the definition of individual dismissals. The 
maximum  duration  of  unemployment  benefits  was  cut  from  38  to  26  months  and  a  declining  profile 
introduced  with  a  10%  cut  after  6 months of  unemployment.  The  maximum  benefit  has  been  reduced. 
Concerning working arrangements, key measures include: reductions of overtime premium by 50% and the 
removal of the additional 25% time off granted per hour of overtime; the possibility of firms and workers to 
distribute  150  hours  over  the  year  by  individual  agreement;  increase  in  the  annual  working  hours  with 
abolition of four national holidays and 3 annual leave days. In the area of collective bargaining, the scope for 
firm-level collective agreements was enlarged with the reduction of the threshold that allows works councils 
to negotiate directly with employers. The government has prepared a plan to reform the PES and implement 
a  wage subsidy. Finally, a recent programme involving about 90000 young will create internships, reduce 
social security contributions and provide subsidies to firms.

Romania

The  collective  bargaining  reform  reduced  the  role  of  the  national  level  as  dominant  bargaining  level; 
abolished  automatic  erga-omnes  extension  at  sectoral  level.  A threshold  of  50%  of  the  total  number  of 
employees  in  the  sector  was  introduced  for  a  labour  contract  to  be  registered  and  potentially  extended  to 
non-signatory parties. The reform tightened also the criteria for setting up union at firm level, increased the 
threshold for union representativeness and, in absence of representativeness, strengthened the role of work 
council. A reform of the EPL increased the trial period for permanent contracts, the maximum duration of 
fixed-term contracts and widened the cases admitted for their use. Working time regulation will ease the use 
of overtime. The Social Assistance Law streamlined social benefits and introduced measures to improve the 
efficiency of social protection expenditure (by means of new eligibility criteria to enhance targeting of social 
welfare support).

55

European Commission

Labour Market Developments in Europe, 2012

Addressing poor educational outcomes is indeed a 
major issue as concerns both the quality and labour 
market relevance of - and the access to - education 
and training systems in several countries (Austria,
Bulgaria,  Czech  Republic,  Germany,  Denmark, 
Estonia,  Hungary,  Malta,  Poland,  Slovenia, 
Slovakia, Spain,  Latvia). In  this  respect,  many 
Member States are also advised to preserve public 
investment 
there 
including education.

in  growth-enhancing  areas, 

are 

A  number  of  Member  States 
also 
recommended  to  ensure  that  their  wage  setting 
mechanisms  appropriately 
reflect  productivity 
developments,  so  as to  boost  competitiveness  and 
support labour market adjustment and job creation.
While some countries have introduced far-reaching 
reforms  of  their  wage  setting  systems  in  this 
direction  (e.g.  Greece,  Spain,  Portugal),  limited 
progress  has  been  made  in  others,  where  the 
functioning  of  certain  wage  setting  and  wage 
identified  as  a 
indexation  systems  has  been 
possible 
(Belgium, 
Cyprus,  Italy,  Luxembourg,  Malta).  In  other 
countries,  a  balance  needs  to  be  struck  between 
ensuring  that  minimum  wage  levels  are  not  too 
high  to  discourage  the  recruitment  of  the  young 
and low-skilled  but  not  as  low  as  to  risk  creating 
in-work poverty (Bulgaria, France and Slovenia).

to  competitiveness 

threat 

of 

Whereas  some  Member  States  have  started  far-
reaching reforms of their EPL (Greece, Italy, Spain 
and Portugal), in others the reform process appears 
slow  in  comparison  to  the  challenges  they  face  in 
terms 
segmentation. 
labour  market 
Recommendations  have  been  addressed  to  France 
and Italy (where a major reform has been adopted 
at the end of June 2012); to Lithuania as concerns 
fixed-term  contacts,  dismissal  provisions  and 
temporary agency  work; to Poland concerning the 
partial  abuse  of  self-employment  and  civil  law 
contracts; to Sweden and Slovenia. 

There  are  several  recommendations  on  labour 
taxation (Austria,  Belgium,  Germany,  Estonia, 
Spain,  France,  Hungary,  Italy,  Latvia,  Slovakia),
largely designed to shift the burden from labour to 
less  growth-distortive  tax  bases  and  aimed  at 
making labour taxation more employment friendly.

Tackling  the  social consequences of the crisis  has 
also  come  to  the  forefront  in  a  number  of 
countries,  especially  those  with  already  weak 

56

to 

improve 

social  protection  systems  and  heavy  pressures  on 
public spending. Recommendations to make social 
transfers  more  effective and 
the 
employability  of  vulnerable  groups have  been 
addressed  to  Bulgaria,  Estonia,  Spain,  Lithuania, 
Latvia and  the  United  Kingdom.  Rising  social 
concerns in programme countries (Greece, Ireland, 
Portugal and Romania) are being addressed in the 
framework 
adjustment 
programmes.

economic 

their 

of 

Finally, several Member States have been asked to
step up their efforts to tackle the low activity rates 
of  older  workers  and  the  widespread  use  of  early 
retirement  and  invalidity  pension  schemes (e.g. 
Austria,  Belgium,  Bulgaria,  Cyprus,  Finland, 
the  Netherlands, 
France,  Luxembourg,  Malta, 
Poland  and  Slovenia).  The  effect  of  demographic 
ageing 
the  withdrawal  of 
experienced  workers  from  the  labour  market  and 
the  prospects  of  a  stagnating/diminishing  working 
age  population  is  imminent  in  many  of  these 
countries,  with  correlated  new  risks  of  skills 
mismatches and shortages. Some of these countries 
are  also  not  fully  using  the  potential  of  migrant 
workers 
the 
Netherlands and Sweden).

(Austria,  Belgium,  Denmark, 

accelerating 

is 

Package

Employment 

In addition to the AGS and the EU Semester CSRs, 
specific  recommendations  relating  to  employment 
policies were issued by the European Commission. 
The 
(Commission 
Communication  "Towards  a  Job-rich  recovery, 
COM(2012)  173  final) complements  the  policy 
priorities  identified  by  the  AGS;  it  identifies  and 
recommends  a  number  of  measures  to  promote 
labour  demand  and  boost  labour  supply  over  the 
medium-term  in line  with  the  European 2020 
employment 
the 
Employment  Package  stresses  the  role  of fiscal
measures  to  foster  job  creation  (e.g.  budgetary 
neutral and cost-effective targeted hiring subsidies 
and reductions in tax wedge on labour) to avoid a 
deterioration  of  employment  chances  of  specific 
population 
long-term 
segments 
unemployed, the young).

objectives. 

Inter-alia, 

(e.g., 

the 

National plans

The action plans announced by the Member States 
in  their  2012  National  Reform  Programmes  are 
broadly consistent with the priorities set out in the 

Annual  Growth  Survey  and  to  a  variable  extent 
address existing country-specific challenges.

to 

improve 

in  order 

transition 

is  proposed 

school-to-work 

the 
Much 
effectiveness  of  ALMPs,  in  particular  to  improve 
the 
the 
employability  of  workers.  Key  reforms  of  job 
protection legislation are tabled in those countries 
that have been addressed CSRs in this field. Major 
reforms of the unemployment system are foreseen 
in  a  few  cases,  while  active  ageing  is  gaining 
momentum in several countries.

and 

the 

that 

enhance 

Measures 
capacity  and 
effectiveness  of  placement  and  matching  services, 
as well as of training and activation policies, have 
been  announced  in  many countries  (e.g.  Belgium, 
Bulgaria,  Finland,  France,  Lithuania,  Latvia, 
Poland,  Portugal,  Romania,  Slovakia,  Slovenia, 
Spain),  in  some  cases  specifically  targeted  at 
groups  such  as  long-term  unemployed,  young 
people  and  those  at  risk  of  social  exclusion.  Few 
interventions  are  also  planned  to  improve  the 
effectiveness  of  wage  subsidies  (Latvia,  Poland
and  Romania).  Only  a  few  countries  announce 
measures 
labour  market 
participation  of  women  (Czech  Republic,  Finland
and the Netherlands).

improve 

the 

to 

Graph I.5.4:

Total number of planned reforms by domain in 
the EU, 2011- 2012

50

40

30

20

10

0

Unemployment
benefits

Job Protection
(EPL)

Training

Active Labour
Market Policies
(without
training)

2011

2012

Source: National Reform Programmes 2011 and 2012

The  urgency of  tackling  youth  unemployment  is 
reflected in the variety of policy plans presented in 
this  field  across  the  EU.  Apprenticeship  and 
internship schemes  will be reinforced in Belgium, 
Denmark, Cyprus, Ireland, Lithuania and Portugal. 
In  Slovakia  a  new  apprenticeship  scheme  will  be 
developed, while Spain has planned a reform of its 

Labour market developments

Part I

education and  vocational training systems and the 
introduction  of  a  dual  vocational  training  system. 
Bulgaria,  Czech  Republic,  Denmark,  Cyprus and 
Estonia will reform their education systems. Malta
expects to present a strategy to tackle early school 
leaving by end 2012, while Lithuania is preparing 
a  new  Lifelong  Learning  Action  Plan.  Other 
measures to facilitate school-to-work transition for 
young  unemployed  are  being  devised  in  several 
countries, often on an experimental basis (Austria,
Bulgaria, Estonia,  Latvia,  Lithuania,  Luxembourg 
and  Slovenia).  From 
is 
contemplating  a  youth  minimum  wage,  while 
Ireland 
to  support 
business start-ups of young people.

is  devising  a  programme 

its  part,  Hungary 

the 

termination 

Large  reforms  are  also  expected  on  the  front  of 
EPL,  concerning  fixed-term  contracts  (Latvia, 
Lithuania),  the  notice  period  and  severance  pay 
(Lithuania,  Slovenia), 
of 
employment  contracts  (Lithuania,  Portugal and 
Slovenia). In Slovenia, the  move towards a single 
contract  is  also  being  discussed,  with  a  view  to 
ease  the  transition  of  workers  from  flexible  to 
more  stable  forms  of  employment,  while  a 
modification  of  the  labour  law  is  pending  in 
Sweden. As described  in  Box  I.5.3,  EPL  reforms 
may  entail  substantial  effects  on  the  overall 
labour  market 
turnover, 
dynamism  and  workers'  reallocation  across  jobs 
and sectors. Based on the framework developed in 
the thematic Chapter 2 and an own update of EPL 
indicators  using  OECD  methodology  (ibidem), 
reforms of EPL carried out in a number of Member 
States  entail  an  increase  in  the labour  turnover 
between  13%  and  50%  relative  to  the  pre-crisis 
historical  average 
level.  An 
the 
interesting  finding  of  the  analysis  is  that  most  of 
this increase is due to an increase in the job finding 
rates  rather  than  to  an  increase  in  the  job 
separation rates. 

thereby  enhancing 

turnover 

in 

Plans  for  major  reforms  to  the  unemployment 
benefit  system  have  been  put  forward  in  the 
Netherlands, where employers will pay for the first 
six  months  of unemployment  benefits,  and  in  the 
United-Kingdom,  where  unemployment  benefits 
will  be  transformed  into  a  universal  credit  from 
October 2013. In-work benefits will be stepped up 
in Austria and Finland.

57

European Commission

Labour Market Developments in Europe, 2012

Box I.5.3: Effect of reforms of employment protection legislation

Firing restrictions associated to tight EPL regulation have a bear on the dynamics of job flows: both inflows
into unemployment and the outflows out of unemployment (see Chapter on EPL in this report). A sclerotic 
labour  market  has major  costs:  it  implies  higher  spells  of  unemployment  and,  possibly,  higher  structural
unemployment. Moreover, reallocation of labour across economic activities is hampered, with implications
for macroeconmic adjustment.

The reforms recently enacted in several Member States have the potential of reducing the hiring and firing
costs, with positive effects on workers' turnover and labour market dynamism. This box provides an attempt
to analyse ex-ante the potential effects of reforms in Greece, Spain, Italy, and Portugal on job market flows.

With a view to quantify the effect of the different reforms on EPL strictness, the EPL indicators constructed
by  the  OECD  have  been  updated  in  light  of  the  main  policy  changes  introduced,  following the  standard 
OECD  methodology. (1)  It  is important  to  stress  that  while  some  aspects  of  the  legislation (like  advance 
notices, the severance payments or the length of the probationary period) can be measured with precision,
other  features,  like strictness  of fair  dismissal  definitions,  are  more  difficult to  quantify  and  measurement
make use of simplifying assumptions. Moreover, some aspects of EPL systems, like interactions among EPL
features, labour  court  practices  and jurisprudence, or  fiscal  treatment  of  different labour contracts, are not
always captured in synthetic EPL indicators.

For example, in Greece the recent EPL reform has only changed the required notice before dismissal,  while
leaving severance payments untouched. However, since the legislation foresees that only half the severance pay
is due when termination is with notice, the reform de-facto reduces also overall severance payments, because
employers after  the  reform will  much more  likely terminate  a  contract with  notice, at  reduced  costs.  These
aspects are not captured by the OECD EPL indicators. Similarly, measures introduced in Italy or in Spain to
promote a rapid resolution of controversies on economic dismissal cases are not incorporated in the indicators. 

With these caveat in mind, EPL indicators have been re-calculated to incorporate the changes introduced for
the recent reforms The main effects on the indicator are summarised in the tables below.

Recent reforms of employment protection legislation for open-ended contracts: 2010-2012

Greece

Italy

Spain

Portugal

Notification procedures
Delay involved before notice can start
Length of notice period at 9 months of tenure
Length of notice period at 4 years of tenure
Length of notice period at 20 years of tenure
Severance pay at 9 months of tenure
Severance pay at 4 years of tenure
Severance pay at 20 years of tenure
Definition of justified or unfair dismissal
Length of trial period
Compensation following unfair dismissal
Possibility of reinstatement following unfair dismissal
Maximum time to make a claim of unfair dismissal
Elements of regulation not entering in EPL calculation
Note: arrows show the effect of on EPL (down means less rigid EPL).

↓

(Continued on the next page)

58

Labour market developments

Part I

Box (continued)

Recent reforms of employment protection legislation for temporary contracts

Greece

Italy

Spain

Portugal

Valid cases for use of fixed-term contracts
Maximum number of successive fixed-term contracts
Maximum cumulated duration of successive fixed-term contracts
Elements of regulation not entering in EPL calculation

↓

↑↓

Recent reforms of employment protection legislation for collective dismissals

Definition of collective dismissal
Additional notification requirements for collective dismissals
Additional delays involved before notice can start
Other special costs to employers of collective dismissals
Elements of regulation not entering in EPL calculation

Greece

Italy

Spain

Portugal

↓

The  reforms  enacted  in  the  countries  examined  entail  a  significant  change in the  ranking  of  EU  countries
according to the EPL indicator (see Graph 1). The overall EPL indicator, obtained as the sum of the indicator
for individual dismissals and for temporary contracts, falls especially for Greece and Portugal, while the EPL
indicator  for  collective  dismissals  falls for  Italy  and  Spain. For  regular  contracts,  the  largest change  in  the 
rank is for Portugal, which before the reform had the strictest regulation. The overall EPL indicator for greece
is affected by less strict conditions for temporary employment.

Graph 1. Computed changes in EPL synthetic indicators

Overall   EPL  indicator

5

4

3

2

1

0

U
L

R
F

S
E

T
P

m
r
o
f
e
r

r
e
t
f
a
S
E

L
E

m
r
o
f
e
r

r
e
t
f
a

T
P

E
B

E
D

Z
C

I

F

L
N

m
r
o
f
e
r

r
e
t
f
a

L
E

T
A

L
R P
O
K

T

I

E
S

m
r
o
f
e
r

r
e
t
f
a

T

I

U
H

K
D

K
S

N
P
J

S
U
A

E
H
C

N
A
C

K
U

A
S
U

5

4

3

2

1

0

A B
T

I

m
r
o
f
e
r

r
e
t
f
a
A
T

I

EPL indicator: Additional  regulation on collective dismissals

X
U
L

E
H
C

E
D

E
S

K
S

L
P

T
A

L
E

S
E

K
D

L
N

U
H

S
U
A

R
B
G

N
A
C

N
F

I

Z F
C

T
P

N
P
J

R
O
K

m
r
o
f
e
r

r
e
t
f
a
S
E

The impact of EPL reforms on job flows can be gauged by means of the estimated sensitivity of job flows to 
changes in the EPL sub-indicators for regular contracts, temporary contracts and collective dismissals. Since 
these sensitivities, estimated on a panel of countries (see the second analytical Chapter in this report for the 
value and the methodology), indicate that the impact of EPL indicators is stronger in case of job finding rates, 
the analysis is focused on this type of flows.

Graph 2. Computed impact of EPL reforms on job finding rates (% change compared with pre-crisis average)

(Continued on the next page)

59

 
 
 
 
 
 
 
 
 
European Commission

Labour Market Developments in Europe, 2012

Box (continued)

Graph 2 reports the combined effect of reforms in various EPL elements in terms of percentage change in job 
finding  rates  compared  with  the  pre-crisis  average. These  effects  need  to  be  interpreted  as  steady-state 
changes. As effects arising from reforms in temporary employment turned out being negligible they are not 
reported.  The  reforms  of  the  EPL  carried  out  in these  countries entail  a  substantial  increase  in  their  labour 
market  dynamism,  corresponding  to  an  increase  in  the  turnover  from  12%  to  50%,  depending  pre-crisis 
average turnover of each country. The 12% increase in the turnover of Spain needs to be considered against a 
relatively higher pre-crisis turnover rate.

Denmark  and  Latvia  plan  a  broad  tax  reform  to 
significantly reduce the tax burden on labour. Cuts 
in  employees'  social  security  contributions are 
being  put  forward  in  Belgium  (2012  June  plans) 
and Germany to increase the financial incentives to 
work,  while  Hungary  will  apply  a  wide  range  of 
reduction 
security 
employers' 
contributions  to  support  labour  demand.  Greece 
also  foresees  cuts in  employers'  social  security 
contributions.

social 

in 

A number of countries are planning to reform their 
early retirement schemes or to step up the financial 
incentives  to  work  longer  (e.g.  Austria,  Belgium, 
Denmark  and  Sweden).  Thorough  reforms  of 
disability  pension  schemes  are  planned  in  Austria 
and  Denmark,  while  specific  measures  will  be 
taken  in  Finland,  Latvia  and  the  Netherlands  to 
the 
strengthen  work 
employment rate of partially disabled people.

incentives  and 

increase 

Assessing the impact of reforms

The accelerated and more ambitious reform action 
that took place in recent years requires appropriate 
monitoring,  with  a  view 
to  calibrate  further 
refinements  of  policy  framework  where  necessary 
and  fine-tune  the  policy  agenda  looking  forward. 
Appropriate  analytical  tools  are  needed  to  assess 
both  ex-ante  and  ex-post  the  impact  of  major 
reforms. Box I.5.3 provides an example of ex-ante 
analysis  on the  impact  of  recent  major  EPL 
reforms in EU countries.

5.5.  CONCLUSIONS

years 

have  witnessed 

Recent 
strong 
intensification  of  reform  activity  across  the  EU. 
Major  reforms  have  been  passed  and  others  are 
planned for the years to come. 

a 

60

Most  of  the  measures  adopted  in  the  latest  years 
appear to be largely in line with the priorities set at 
European  level,  notably  measures  that  help  to 
labour  markets  more 
mobilise 
dynamic, 
improve 
competitiveness.

labour,  make 
tackle  precariousness  and 

Countries  with  high  unemployment  and  large 
external imbalances have taken up the challenge of 
improving  the  responsiveness  of  wages  and  their 
labour  market  adjustment  capacity,  by  thoroughly 
reforming  their  job  protection  and  wage  setting 
systems.  In  these  same  countries,  priorities  are 
now  moving  forward 
these 
to  ensuring 
reforms pay-off once growth resumes.

that 

However,  while  ambitious  policy  agendas were 
adopted in several countries to remove obstacles to 
labour  market  adjustment, in  others  reforms  were 
rather  marginal,  rarely  encompassing  more  than  a 
single  dimension 
time.  There,  EU 
at
recommendations give a direction for action. 

a

the 

Looking  forward,  EU  labour  market  challenges 
will remain high on the policy agenda. The extent 
to  which  potential  growth  can  sustainably  resume 
largely depends on how successfully labour market 
bottlenecks  are  addressed  and 
risk  of 
unemployment  hysteresis  is  tackled.  Effectively 
tackling joblessness will also be a key condition to 
ensure  the  social  and  political  sustainability  of 
current 
and 
macroeconomic  adjustment  strategies.  In  light  of 
the  very  differentiated  labour  market  conditions 
across  Europe,  and  of 
important  policy 
spillovers,  notably  in  the  euro-area,  the  policy 
response  needs 
to  be  differentiated  and 
coordinated.  In  this  respect,  EU  surveillance  will 
continue to play a key role. A number of short-to-
medium term priorities emerge as follows:

reform 

action 

fiscal 

and 

the 

•

recent  momentum 

the 
towards  ambitious 
structural  reforms favouring  adjustment  needs 
to  be  maintained in  countries  characterised  by 
major  labour  market  challenges,  including  for 
what  concerns  a  proper  implementation  of 
enacted measures;

• momentum should be kept also towards policy 
action  to  raise  participation  rates;  where  fiscal 
conditions allow, tax reforms should create the 
conditions  for  better  mobilising  labour  supply 
and demand;

•

•

•

•

to  prevent  employment 
losses  becoming 
permanent  and  avoid  hysteresis  effects  once 
growth resumes, policy frameworks need to be 
stepped  up,  where  necessary,  to  ease  labour 
market  matching and maintain  the  long-term 
unemployed  in  the  labour  force,  and  adequate 
resources ensured;

in  countries  with  serious  youth  unemployment 
problems,  policy  action  could  address,  with 
different  emphasis,  labour  legislation,  the  tax 
and benefit regime, ALMPs, and education and 
training,  including  via  an  effective  use  of  the 
apprenticeship systems;

Labour market developments

Part I

the 

labour 

the  current 

among  the  schemes  aimed  at  tackling  the  risk 
of  hysteresis  a 
juncture  by 
promoting  the  hiring  of  workers  at  risk  of 
long-term 
leaving 
unemployed,  young  workers  with  no  previous 
experience…),  temporary  social  security  cuts 
or  job  subsidy  schemes  for  new  hires  can  be 
considered,  if  well  targeted  and  effectively 
designed;

force 

(the 

in  some  countries,  surging  unemployment  and 
falling  incomes  call  for  the  enhancement  of 
current  social  protection  systems  in  terms  of 
adequacy, sustainability and incentives. 

61

Part II
Thematic chapters

1.

A DECADE OF LABOUR MARKET REFORMS IN THE EU: 

TRENDS, MAIN FEATURES, OUTCOMES

1.1. 

INTRODUCTION

Since  the  outburst  of  the  financial  crisis,  EU 
countries are facing tremendous reform challenges. 
Since the onset of EMU, there was clear awareness 
that  a  successful  monetary  union  would  have 
required  reforming  labour  markets  where  needed 
in  such  a  way  to  ease  adjustment  in  the  face  of 
asymmetric shocks and to permit a prompt reaction 
of  price  competitiveness  as  a  tool  to  absorb 
idiosyncratic  shocks  and  favour  the  correction  of 
macroeconomic  imbalances.  The  need  for  such 
reforms  has  become  not  only  evident  but  urgent 
after the crisis in light of  the  highly asymmetrical 
impact on the financial sector, public finances, and 
the  real  economy  of  EU  and  euro-area  countries, 
and as a consequence of the sudden unwinding of 
large  external  imbalances  accumulated  over  the 
2000s in a number of these countries. 

in 

included 

labour  market, 

schemes  were 

The need of timely and courageous labour  market 
reforms  was  reflected  in  the  identification  of 
policy  priorities  at  EU  level.  Recommendation  to 
put in place policies to counter the tremendous loss 
of output after the bankruptcy of Lehman Brothers 
in  2008  by  means  of  strengthened  temporary 
income support for the unemployed and short-term 
working 
the 
Commission  European  Economic  Recovery 
Package.  Reforms  improving  the  functioning  of 
the 
including  by  means  of 
supportive labour taxation, EPL frameworks aimed 
at 
tackling 
segmentation,  benefit  and  activation  systems 
providing  the  unemployed  with  incentives  to  take 
setting 
up 
frameworks, 
the 
priorities  identified  in  the  2011  and  2012  Annual 
Growth  Survey  by  the  Commission,  endorsed  by 
the  EU  and  European  Council.  Country  Specific 
Recommendations were issues in the framework of 
the  EU  Semester  for  economic  surveillance, 
reflecting these priorities. 

feature  prominently  among 

adjustment-friendly  wage 

favouring 

creation 

jobs, 

and 

job 

Against the background or an increased urgency to 
reform labour markets, and broadly in line with the 
recommendations  by  European  institutions,  most 
Member  States  have  stepped  up  their  reform 
agenda  both  by  taking  an  increased  number  of 

64

measures and taking action to reform those aspects 
that are key to ensure effective changes but that are 
at the  same time politically costly because  having 
relevant redistributive implications.

increased  reform  activism  calls  for  a 
This 
proportionate increased effort to track the record of 
past reforms and assess their features, determinants 
and  effects.  Such  an  assessment  is  complex,  most 
notably in light of the very heterogenous character 
of  the  complex  and  varied  set  of  policies  that 
normally  fall  under  the  broad  heading  “reform”. 
The  first  and  most  important  condition  for  an 
is  adequate 
effective  assessment  of  reforms 
and 
information 
characteristics.

features 

reform 

the 

on 

the  European  Commission 

The  aim  of  this  chapter  is  to  describe  recent 
reforms carried out in EU countries making use of 
the  LABREF  database  that  was  set  up  by  DG 
ECFIN  of 
in 
cooperation with the Economic Policy Committee. 
This  database  contains  information  on  a  large  set 
of  policy  measures  carried  out  between  2000  and 
2010.  As  compared  with  other  similar  existing 
databases,  contains  information  on  a  larger  set  of 
reform characteristics.

The  remainder  of  the  Chapter  is  organised  as 
follows. The next section discusses issues relating 
to  the  measurement  of  economic  reforms.  The 
description  of  the  LABREF  databases  follows. 
Section 3 presents information on the main trends 
and  cross-country  features  for  what  concerns 
labour market reforms in the EU since 2000.

1.2.  MEASURING  LABOUR  MARKET  REFORMS: 

METHODOLOGICAL ASPECTS

1.2.1. Tracking labour market reforms

Reform  databases  can  either  be  descriptive  or 
indicator-based.  Descriptive  databases  collect 
information  on  enacted  reforms  on  the  basis  of 
predefined  criteria,  with  the  aim  of  providing  an 
exhaustive description of the main policy measures 
taken.  Indicator-based  databases  aim  instead  at 
quantifying the degree of stringency and distortion 
and 
existing 
associated  with 

regulations 

the 

institutions.  These  indicators  provide  therefore  a 
synthetic  measure 
anti-competitive 
of 
implications  of  the  existing  stock  of  regulations 
and institutions, and reforms can only be measured 
indirectly,  and  in  an  aggregate  fashion,  by  means 
of 
indicator.  While 
in 
indicator-based  databases  permit  a  very  effective 
synthesis of information for comparisons over time 
and across countries, information at the level of the 
specific policy measures is missing.

time  differences 

the 

Descriptive databases

The  International  Labour  Organisation  (ILO) 
provides  synthetic 
information  on  measures 
adopted in the fields of minimum wages, maternity 
protection  and  working  time  and  referral  to 
relevant  regulations.    The  ILO  also  compiles  the 
NATLEX  database,  providing  a  comprehensive 
record  of  abstracts  of  legislation  and  relevant 
information of national labour, social security and 
related human rights laws for over 190 countries.   

The inventory of labour market reforms developed 
by  the  OECD  in  the  framework  of  the  evaluation 
of  the  OECD  Jobs  Strategy  contains  information 
on reforms in  seven  main policy areas  grouped in 
two sub-periods (1995-1999 and 2000-2004) . 

The  “Social  Reforms  Database”  developed  by  the 
Fondazione  Rodolfo  Debenedetti
provides 
information on reform measures adopted in the EU 
countries  starting  from  the  eighties.  The  database 
collects 
the  main  qualitative 
features  of  reforms  in  four  broad  policy  areas  -
employment  protection  legislation;  public  pension 
systems;  non-employment  benefits,  migration 
policies. 

information  on 

Indicator-based databases

Structural  indicators  are  increasingly  used  in 
policy  analysis.  While  providing  a  very  useful 
proxy for the extent of government intervention in 
the labour market, these indicators raise a number 
of measurement issues: (i) the choice of the weight 
attributed  to  the  various  aspects  of  regulation  is 
somehow arbitrary; (ii) only a subset of regulatory 
aspects is taken into account and relevant country-
specific  features  in  the  design of  the  regulations 
are not considered; (iii) the degree of enforcement 
of specific regulations is often not captured. 

Part II

Thematic chapters

the 

stringency 

Indicators  measuring 
of 
employment  protection  regulations  have  been 
developed  by  the  OECD,  which  capture  the  most 
important  features  of  regulation,  both  for  regular 
and 
for  collective 
dismissals,  for  most  OECD  countries  since  the 
eighties. 

temporary  contracts,  and 

Indicators  for 
labour  market  regulations  are 
developed  also  by  the  in  the  framework  of  the 
Fraser  Institute’s  “Economic  Freedom  around  the 
World” index. Indexes scoring the absence of anti-
competitive  restrictions  in  a  number  of  domains 
are  produced  for  a  large  number  of  countries 
across  the  world,  starting  from  the  seventies.  The 
economic  freedom  index  for  the  labour  market  is 
indicators  on 
the  combination  of 
minimum  wage,  flexibility  in  hiring  and  firing, 
level  of  collective  bargaining,  unemployment 
insurance; use of military conscripts. 

separate 

The  World  Bank  “Doing  Business”  database 
provides  scores  for  regulations  hampering  a 
business-friendly  environment,  with  an  attempt  to 
capture  also  information  on  enforcement.  Within 
the  Doing  Business  framework,  a  number  of 
indicators  concerning  labour  market  regulations 
for 85 countries in the early 2000s were developed
by  Botero  et  al.  (2004).  While  the  country 
coverage  is  large,  the  database  spans  a  relatively 
short time series (it starts in 2003). 

The  Global  Labour  Survey  (GLS)  database  (Chor 
and  Freeman,  2005)  conducted  in  2004  at  the 
Harvard Labour School seeks to measure de facto 
labour practices around the world covering aspects 
of 
institutions  such  as  employment 
regulations,  employee  benefits,  wage  setting,  and 
builds indices of labour practices in ten broad areas 
for 33 countries.

labour 

1.2.2. Description of the LABREF database

of 

The  LABREF  database  was  developed  upon 
initiative 
the  European  Commission’s 
Directorate  General  for  Economic  and  Financial 
Affairs  (DG  ECFIN)  and  the  Labour  Market 
Working  Group 
the 
to 
Economic Policy Committee (EPC) in 2005. 

(LMWG)  attached 

The  aim  is  to  build  an  effective  tool  for  the 
surveillance  of  labour  market  policies  in  the 
policy 
framework 

economic 

the  EU 

of 

65

European Commission

Labour Market Developments in Europe, 2012

coordination processes, and for the analysis of the 
impact  of  reforms  on  labour  market  performance. 
LABREF  is  a  descriptive  database  providing, 
compared  with  other  similar  databases,  a  higher 
amount  of 
the  features  and 
characteristics  of  measures  in  a  broad  range  of 
labour market and welfare policy fields.

information  on 

LABREF  is  organised  around  52 policy  fields, 
further  grouped  in  9 broad  policy  domains  (see 
Box  II.1.1).  The  fields  covered  by  the  database 
reflect  standard  classifications  of  labour  market 
and  welfare  institutions  (e.g.,  Nickell  and  Layard, 
1999),  with  the  addition  of  labour  mobility  and 
migration policies. 

the 

also 

changes 

reported 

The  measures  reported  in  the  database  refer  to 
information  on  enacted  legislation (approved  by 
Parliament), as well as other public acts of general 
scope  (such  as  decisions  of  public  authorities  or 
general  court  decisions)  likely  to  have  an  impact 
on labour market performance, including measures 
entailing 
implementation 
in 
framework  of  a  previously adopted  reform.  In 
encompass 
reforms 
addition, 
including  cross-industry 
collective  agreements, 
(involving 
agreements 
tripartite 
agreements, 
government, 
employers’ 
and 
trade  unions 
federations),  sector-level  collective  agreements 
(whenever  the  agreement  concluded  in  one  sector 
is likely to set the patterns for negotiations in other 
sectors)  and  company  agreements,  provided  that 
they have the potential to affect a large proportion 
of employees or to engender a change of regime in 
the  medium 
innovative 
(for 
company  agreements  concluded  in  Germany  on 
pay  and  working  time). The  database  does  not 
record  information  on  discussions  of  planned 
reforms or law bills not yet formalised. (21)

instance, 

term 

For each measure the database collects information 
on  the  main  objective  and  status  of  the  reform 
and 
(legal 
status, 
implementation) 
of 
characteristics which are likely to shed some light 
on its design, scope, implementation and durability 
(e.g.,  target  group,  budgetary cost,  presence  of  a 

timing 
and 

adoption 

number 

on 

of 

a 

(21) A  single  piece  of  legislation  may  cover  several  areas  of 
policy  intervention  and  will  consequently  be  recorded  as 
pertinent  to  a  multiplicity  of  policy  fields  or  domains  in 
LABREF.

66

broad  policy  package  and  complementarities  with 
other policies, positions of social partners…).

Information  on  the  direction  of  reforms  (whether 
they are  ex-ante  likely  to have  an  employment-
friendly  impact  by  reducing  taxation,  regulations, 
generosity  of  out-of  labour  income,  improving 
incentives  and  labour  market  matching…)  and 
relevance  (major  versus  non-major  reforms)  is 
codified  by  means  of  binary  indicators  (see  Box 
II.1.1 and  the  Appendix  for  the  criteria  followed 
for such classification).

(e.g., 

Although  such  classifications  are  subject 
to 
inevitable  simplifying  assumptions  and,  for  that 
reason,  are  to  be  interpreted  with  caution  and 
should  not  be  given  mechanistic  normative 
implications 
labour 
reforms 
taxation or the generosity of unemployment benefit 
systems  might  not  directly  help  the  creation  of 
employment but may be fully justified on different 
grounds), 
they  prove  useful  when  analysing 
determinants  and  effects  of  reforms,  as  shown  in 
the following sections.

increasing 

the 

The  compilation  of  the  database  is  carried  out  in 
two  steps.  Firstly,  information  is  collected  by  DG 
ECFIN,  using  publicly  available  national  and 
international  sources  and  classified  according  to 
the  criteria  agreed  with  the  EPC. (22) In  a  second 
step, 
information  collected  are  sent  for 
validation  to  national  authorities  via  the  EPC.  At 
present,  LABREF  covers  policy  measures  for  the 
EU-25  over the  2000-2010  period,  plus  Romania 
and Bulgaria starting form 2003. Information up to 
2010 was  validated  by  the  Members  of  the 
Economic  Policy  Committee  of  the  ECOFIN 
Council.  The  database  is  accessible  through  the 
website
http://ec.europa.eu/comm/economy_fina-
nce /indicators/labref/.

(22) Sources used to compile  LABREF include ILO databases, 
information  published  by  EIRO  (European  Industrial 
Relations  Observatory  of  the  Dublin  Foundation  for  the 
Improvement of Working and Living Conditions), country 
reports  by  the  OECD  and  IMF,  National  Action  Plans  for 
Employment  annually  set-up  in  the  framework  of  the 
Employment Strategy, National Reform Programmes under 
the  Lisbon  Strategy, national 
legislation  and  other 
information  available  from  the  websites  of  the  EU 
Ministries for Employment and Social Affairs.

Part II

Thematic chapters

Box II.1.1: Overview of the LABREF database

The database covers main reforms in 52 labour market and welfare policy fields, which are further grouped in 
9 broad policy domains as follows:

1. Labour taxation

-
-
-
-

Employers’ social security contributions
Employees’ social security contributions
Income tax
Other
2. Unemployment benefits

-
-
-
-
-

Net replacement rate
Duration of unemployment benefits 
Coverage (number of people or sectors of the economy covered)
Entitlement (eligibility rules, job availability requirements)
Other
3. Other benefits

Short-time working schemes
In-work benefits (employment conditional benefit or tax credit)

-
-
- Means-tested benefits (housing, social assistance)
-
-

Sickness schemes
Family-related benefits

4. Active labour market programmes

-
-
-
-
-

Public Employment Services (job assistance, job-counselling etc.)
Training
Direct job creation and employment subsidies
Special schemes
Other 
5. Job protection

-

Permanent contracts

• Procedural requirements 
• Notice and severance payments
• Restrictions to dismissal 
• Collective dismissals
• Other 

-

Temporary contracts

• Maximum number of renewals 
• Maximum duration
• Temporary agency work
• Other 

6. Pension Systems

-
-
-

Early retirement
Disability schemes
Pensions 
• Level 
• Eligibility
• Coverage
• Tax treatment 
• Contributions
• Other 

7. Wage Setting 

-
-
-

Statutory minima
Contractual minima
Contractual Flexible arrangements (e.g. performance-related pay) 

(Continued on the next page)

67

European Commission

Labour Market Developments in Europe, 2012

Box (continued)

-

Social Pacts, framework agreements (changes in the level of wages, changes in the 
way the wage setting system works)
Government intervention in wage bargaining (e.g. extension clauses)
Public wages
Other 
8. Working time 

-
-
-

- Working hours management
-
- Working time organisation over the life time (e.g. working time accounts; part-time 

Participation friendly schemes 

work arrangements for older workers; sabbatical leaves etc)
Other
9. Immigration and mobility 

-

-

-
-

Immigration

• Immigration control
• Selective Immigration policies 
• Measure to facilitate labour market integration of immigrants

Internal mobility
Other

•

The information on reform characteristics collected and reported in LABREF concerns the following aspects:
• General description of the measure: The aim and main features of the reform are described. Reference 
to the text establishing the measure is reported (budget law, decree,…). The specific information source 
used to fill the database is indicated.
Timing.  Year  of  adoption:  the  date  when  a  reform  measure  is  approved  (by  Parliament,  government, 
social partners,…). Timing of implementation: this corresponds to the scheduled or expected timing of 
the implementation (i.e., entry in force, phasing-in schedule,…). No recording of planned reforms.
Scope, targeting. Is the measure applied to new entrants only or also to current incumbents? Are there 
particular socio-economic categories targeted ( i.e., young, older worker, low wage earners,..)?.

•

• Direct  budgetary  costs  for  general  government:  As  a  first  option  here  appears  only  information  from 

national authorities.

• Monitoring,  enforcement.  Are  enforcement  and  monitoring  procedures  put  in  place?  Is  an  ex-post 
evaluation  foreseen?  If  so,  is  the  assessment  carried  out  by  the  government  or  by  some  independent 
organisation? 

• Reform packages, interactions. Is the reform part of a broader reform package? Does the reform require 
policy interventions in related areas? Is the measure embedded in a formal long-term policy programme?
• Role of social partners. Is there an involvement of the social partners? If so, do they have an active role 

or a passive (consultative) role? Do they agree on the measure? 

Binary indicators have also been constructed for each policy measure as follows: (i) direction: employment-
friendly reforms reducing labour taxation, regulatory restrictions, the generosity of out of work support, or 
improving  labour  market  matching (score  1)  are  separated  from  the  rest  (score  -1);  (ii)  intensity:  major 
reforms (reforms that are either systemic or parametric but revising at the same time a number of relevant 
parameters)  are  distinguished  from  the  rest.  The  criteria  chosen  for  the  classification  of  the  direction  of 
reforms are detailed in the Appendix. 

Synthetic  indicators  have  been  constructed  to  aggregate  information  on  reform  activity  within  a  given  policy 
domain  or  field  in  a  given  country,  in  a  given  year.  In  addition  to  a  synthetic  indicator  of  reform  intensity
corresponding to the total number of reforms carried out, a synthetic direction indicator (obtained as the algebraic 
sum of direction binary indicators) provides information on whether reform action was employment-friendly. 

For the sake of presentation and analysis in this Chapter, only reforms with relevant direct impact on labour 
market  outcomes  are  considered.  Immigration  and  mobility  policies  are  not  examined,  as  well  as  pension 
reforms  different  than  those  with  direct  impact  on  early  exit  from  the  labour  market.  Only  wage  setting 
reforms that  modify  the  standard  criteria  for  wage  formation  are  considered  (government  intervention  on 
wage  setting  mechanisms,  framework  agreements  on  collective  bargaining,  social  pacts  and  tripartite 
agreements), while changes in the level of statutory minimum wages are not analysed. 

68

Part II

Thematic chapters

Graph II.1.1: Number of reforms by domain and country group

Active Labour Market Policies

Early withdrawal

Job Protection (EPL)

4

3

2

1

0

3

2

1

0

.8

.6

.4

.2

0

.6

.4

.2

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1.5

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Labour Taxation

Other welfare-related benefits

Unemployment benefits

2

1.5

1

.5

0

1

.8

.6

.4

.2

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Wage Setting

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

.8

.6

.4

.2

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Working Time

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Source: DG ECFIN LABREF database.

1.3. 

EU LABOUR MARKET REFORMS 2000-2010:
STYLIZED FACTS

This section looks at the evolution of reforms and
their  characteristics,  and  their  distribution  across
different policy domains and country groups with a
view to distil a number of stylised facts.

Graph  II.1.1 shows the  evolution  the  average
number  of  reforms  for  each  policy  domain,
distinguishing  for  country  groups. For  instance,
the  height  of  the  first  bar  under  "Active  Labour
Market Policies"  indicates  that  on  average  EU
member states  implemented  1.5  reforms  in  this
domain  in  2000. (23) The  colour  code within  the

(23) The analysis is based on the country taxonomy proposed by
Esping  and  Andersen  (1990)  and European  Commission 
(2007)  where  countries  are  classified  into  five  groups  on
the  basis  of soci-economic  systems.  This  classification
covers  22  EU  countries  which  are  classified  into  five
groups  on  the  basis  of  principal  component  analysis. The
five missing EU countries were allocated as follows: Malta
and  Cyprus  were  allocated  to  the  Anglo-Saxon  group  of
countries, Luxembourg to the Continental group; Romania
and Latvia to the Central, Eastern group of countries. Note 
that in the Esping and Andersen taxonomy the Netherlands
in  classified  among  northern  countries,  Greece  among 
Eastern countries.

bars  shows  the  distribution  of  the  reforms  across
country  groups.  These groups  represent  types  of
labour market  institutions:  countries within  each
group have relatively similar institutional structure.

A first look at the graphs reveals that the frequency
of  policy  intervention varies  considerably  across
policy  domains.  On  average, most  reforms were
undertaken  in  the active labour market policy and
labour  taxation  domains,  while  early withdrawal
and wage  setting  reforms  are  relatively  scarce.  In
most  policy  domains  the  number  of  reforms  is
showing  an  increasing  trend.  This  is  due  to  the
increased  number  of  reforms  during  the crisis, 
which  is  at  the  end  of  the  sample  period.  Policy
activism seems to peek in 2008-2009.  Two policy
domains  are  exceptions 
trend:  early
withdrawal  and working  time  reforms.  In  these
domains there are significantly less reforms during
the crisis period.

this 

to 

When looking at the distribution of reforms across
country  groups,  two  observations stand  out.  First,
this distribution  is  unstable  over  time:  in  some
periods  some  groups  are  more  active,  in  other
periods reform activity is instead observed in other
groups. An  explanation  could  be  that, with  the

69

European Commission

Labour Market Developments in Europe, 2012

exception of the crisis period, reforms are often the
response to asymmetric shocks, which is consistent
with a relatively low degree of synchronisation of
reforms  across  countries  over  the  whole  decade.
Second,  some  country groups  do  not  undertake
reforms in some policy domains for a large part of
the  observed  period.  For  example,  there  are  very
concerning 
early withdrawal
few 
instruments 
or
countries 
by  Anglo-Saxon 
concerning  job  protection  by  Nordic  countries.
Given that country groups are defined on the basis
of  similar 
these
differences  reflects  the  fact  that  the timing  of
reforms is  linked  to  the  interplay  between  shocks
and the typology of existing institutions.

labour market 

institutions, 

reforms 

Measures in these domains account by themselves
two
the measures
the 
thirds  of
implemented in 2010.

total  of 

The  crisis  also increased the number  of  reforms
that  target  some  specific  part  of  the  population
(women,  self-employed,  young  etc.)  as  Graph
II.1.3 indicates.  No  clear  time  trend  is  instead
visible  for what  concerns  the  fraction  of  reforms
that  are  classified  as  "major"  (e.g., systemic  or
tackling more than one parameter, see Box II.1.1).

Graph II.1.3: Fraction of major and targeted reforms

Active Labour Market Policies

Early withdrawal

Job Protection (EPL)

38%

Source: DG ECFIN LABREF database.

Graph II.1.2: Distribution of reforms across policy domains

2000

2006

17%

4%
9%

7%

29%

9%

18%

8%

2008

10%

5%

24%

13%

13%

3%
10%

20%

2010

9%4%

9%

5%

6%

12%

26%

31%

3%

8%

9%

8%

11%

3%

18%

Active Labour Market Policies

Early withdrawal

Job Protection (EPL)

Labour Taxation

Other welfare-related benefits

Unemployment benefits

Wage Setting

Working Time

Source: DG ECFIN LABREF database.

The distribution of reforms across policy domains
is  much  more stable,  especially until  2008,  as
Graph II.1.2 shows. Until 2008, the only trend one
can observe is the gradual decline in the incidence 
of working time and early withdrawal reforms and 
a  parallel  increase  in  labour  taxation  and  other
welfare-related  benefit  reforms.  The  latter  also
include  short  term working  schemes,  which  were
implemented  simultaneously by  a number  of  EU
countries  as  a  response  to  the  crisis  in  2008  and 
2009  (as  revealed by  the  sudden  increase  in  these
years  of  policy measures  in  the  "other benefit"
domain, Graph II.1.1).

As  the  crisis  dragged  on,  labour market  reforms
became  more  frequent  in  domain  of  active  labour
market  policies,  job  protection,  wage  setting. 

70

1

.5

0

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Labour Taxation

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Wage Setting

1

.5

0

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other welfare-related benefits

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Unemployment benefits

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Working Time

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Fraction of major reforms

Fraction of targeted reforms

Similarly,  no  trend  is  apparent  concerning  the
scope  of  reforms,  i.e.,  the  fraction  of  reforms
targeted  to  the whole  population,  incumbents,  or
new  entrants  only  (Graph  II.1.4):  most  reforms
extend  to  the whole  population  over  the whole
decade. 

Graph II.1.4: Fraction of reforms aimed at new entrants and

incumbents

Active Labour Market Policies

Early withdrawal

Job Protection (EPL)

1

.5

0

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Labour Taxation

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Wage Setting

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

.5

0

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other welfare-related benefits

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Working Time

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

.5

0

1

.5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Unemployment benefits

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Both incumbent and new entrants
Only incumbents

Only new entrants

Source: DG ECFIN LABREF database.

Part II

Thematic chapters

Nevertheless, there  were  periods  when  measures
targeted  mostly  new entrants,  most notably  in  the
early withdrawal domain, and, to a lesser extent, in
the active labour market policy, job protection and
unemployment benefit domains.

the  direction  of 

Information  on 
the  policy
measures (i.e.,  whether a measure is employment-
friendly) provides additional insight into the nature
and  purpose  of  labour market  reforms  during  the
last  decade.  Graph II.1.5 shows  the  evolution  of
the  average  number  of  reforms in  each  domain,
distinguishing  by  direction.  For  example,  the first
blue  bar  of  the  "Early withdrawal"  policy  domain 
shows that, on average, 0.25 employment-friendly 
reforms were implemented in 2000 (i.e., one fourth 
of the countries implemented such a reform), while
the green bar indicates that about the same number
of reforms in the same domain were implemented
in  parallel  the  same  year,  but without  having  an
employment  impact  that  can  ex-ante  be  judged  as
positive.

setting)  present  a 

The  first message  of  the  graph  is  that  there  are 
considerable  differences  across  policy  domains
regarding  the fraction  of  employment-friendly
measures.  Not  surprisingly, by  their  own  nature,
ALMPs  are  predominantly  employment-friendly.
Labour taxation and working time reforms are also
happened  to  be  more  frequently  employment
friendly  overt  the  past  decade.  Measures  in  other
domains  (job  protection,  unemployment  benefits,
wage 
roughly  balanced
distribution between reforms that are employment-
friendly  and  that  are  not.  Reforms  in  the  other
include  most  social
benefit  domain 
assistance schemes), in light of the criteria adopted
(see  Appendix)  happen  to  be more frequently 
classified  as  not having  an employment-friendly 
impact,  because  of  the  possible  repercussions  on
labour  participation  (of  course,  this  implies no
judgement  on the  desirability  of  these  policies  on
different grounds).

(which 

In most  policy  domains,  an  increasing  trend  is
observed for reforms in both directions. However,
after  the  crisis,  the  frequency  of  employment-

Graph II.1.5: Direction of reforms by policy domain (average yearly frequency across the EU)

Active Labour Market Policies

Early withdrawal

Job Protection (EPL)

0

-1

-2

-3

-4

1

0

-1

-2

-3

.4
.2
0
-.2
-.4
-.6

.2
.1
0
-.1
-.2
-.3

1

.5

0

-.5

-1

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Labour Taxation

Other welfare-related benefits

Unemployment benefits

.6
.4
.2
0
-.2
-.4

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1

.5
0

-.5

-1

.5

0

-.5

-1

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Working Time

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Wage Setting

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

71

European Commission

Labour Market Developments in Europe, 2012

increased, notably 

friendly  reforms
in some
domains.  The  clearest  example  are  reforms in
wage  setting
frequently
employment-friendly after 2007.

became  more 

that

It  is worthwhile  to  look  deeper  between  policy
domains and zoom into those policy fields with the
impact: 
most 
unemployment  benefits,  job  protection,  and wage
setting policies.

macro-structural

relevant 

Graph II.1.6 shows policy measures (fields) within
the unemployment benefits domain. It reveals that
most measures  in  the  field  of  duration  and
entitlement  were  often  employment-friendly.  The
coverage  of  benefits was  instead  raised  after  the
crisis.  The  balance  between measures  raising  and
reducing  replacement  rates shifted  as  the  crisis
unfolded:  initially  a higher  number  of measures
raised  benefits;  as  the  crisis dragged  on measures
reducing benefits became relatively more frequent. 

Graph II.1.6: Direction of reforms in the unemployment

benefit domain (average yearly frequency 
across the EU)

Coverage

Duration

.1

.05

0

-.05

-.1

.3

.2

.1

0

-.1

-.2

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Entitlement
(eligibility rules, job availability requirements)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

.15

.1

.05

0

-.05

-.1

.2

.1

0

-.1

-.2

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Net replacement rate

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

the 

Graph  II.1.7,  shows  reforms within 
job
protection  domain.  It  reveals  increased  policy
activism  in  the  case  of  permanent  contracts since 
2006, with  a  broadly-balanced  frequency  of
measures in terms of directions. As for fixed-term
contracts,  in  the  past  decade  the  incidence  of
measures 
almost
systematically  below  that  of measures  tightening
conditions, which may  reflect,  in  a  number  of
to  past  reforms
cases,  a  gradual  adjustment 
relaxing  conditions  for fixed  term  contracts with
the implication of raising employment while at the
same time creating segmentation.

conditions 

relaxing 

is 

72

Graph II.1.7: Direction of reforms in the job protection

domain (average yearly frequency across the
EU)

Fixed term contracts

Permanent contracts

.3

.2

.1

0

-.1

-.2

.15

.1

.05

0

-.05

-.1

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

The cyclicality of measures affecting wage setting
(higher frequency of employment-friendly reforms
in  low-growth  years)  previously  pointed  for  the
whole  domain  of measures  (including  also  social
pacts  and  tripartite  agreements)  is  even  clearer
when focusing on the field comprising government
intervention  aimed  reforming  the wage  setting
system only (Graph II.1.8) This evidence suggests
a shift  in  the  positioning  of governments  on  the
wage-employment trade off during periods of high 
unemployment.

Graph II.1.8: Government intervention in wage setting
(average yearly frequency across the EU)

.2

0

-.2

-.4

-.6

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

Finally,  it  is worthwhile to  compare  reform
directions  across  countries within  each  policy
domain.  The  graphs  in Appendix A.1.2  provide
some interesting insights:

•

the  comparison  of  reform  patterns within
country groups  reveal  some  similarities,  thus

Part II

Thematic chapters

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

Graph II.1.9: Number of reforms and the unemployment rate

AT

BE

BG

CY

CZ

DE

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

DK

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

HU

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

MT

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

SI

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

EE

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

IE

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

NL

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

SK

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

ES

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

LT

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

PT

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

FI

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

LU

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

RO

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

FR

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

LV

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

SE

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

EL

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

IT

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

PL

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

UK

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

40

30

20

10

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

0
2
5
1
0
1

5

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Number of reforms

Unemployment rate

Source: DG ECFIN LABREF database, Eurostat

confirming that institutional factors play a role
in driving reform patterns.

• Central  and  Eastern  European  countries were
relatively less active in the ALMP domain. 

countries 

• Concerning job  protection  measures, Anglo-
Saxon 
implemented
employment-friendly  reforms, while  Southern
Countries  carried  out  frequently  this  type  of
reforms.

barely 

• Eastern  and  Continental  countries 

relied
relatively  strongly  on  employment-friendly 
welfare benefit reforms. 

• Even within  country  groups,  there is  a  good
deal  of heterogeneity  in terms  of  direction  of
setting
unemployment  benefit  and wage
reforms.

• Continental countries  were  by  far the  most
frequent users of employment-friendly working 
time measures.

1.4. 

SEARCHING  FOR  THE  DETERMINANTS  OF
LABOUR MARKET REFORMS

reform 

When  and where  labour market  reforms  are  more 
likely to take place? What are the characteristics of
countries  exhibiting  higher 
intensity?
During which  periods  reform  action  is more
abundant? What factors trigger reforms? These are 
the  questions  addressed  in  this  section.  To  this
purpose,  the  analysis  builds on  synthetic  reform 
indicators varying  across  countries  and years,  as
described in Box II.1.1. 

The co-movement between the number of reforms
and  the  most  relevant  labour market variable  for
policy makers,  unemployment,  suggests 
that
reforms  are more  frequent 
in  periods when 
unemployment starts  increasing  (Graph II.1.9). 
This is particularly evident after the 2008 recession
in most countries.

The  scatterplot  in  Graph II.1.10 confirms  this
finding in a cross-section of countries. The average
reform  intensity  tends  to  be  higher  in  countries
higher
characterized 

average 

on 

by 

a 

73

European Commission

Labour Market Developments in Europe, 2012

unemployment  rate.  The  cross-country  positive
relation  between  reforms  and  unemployment  is
quite  neat,  Poland  and  Slovakia  being  outliers  in
light  of  the high unemployment  rates  in  early
2000s following transition.

Graph II.1.10: Average number of reforms and
unemployment rate, 2000-2010

Reforms  are  also more  frequent  in  countries with
segmented 
labour markets.  Countries with  a
particularly high share of long-term unemployment
do not exhibit instead a significant correlation with
employment-friendly  policies:  the  evidence  based
on  aggregate  reform  indicators  do  not  permit  to 
establish  a  clear  pattern  and  disaggregate
information on reforms is required.

15

10

0
1
0
2
-
0
0
0
2

,

e

t

a
r

t

l

n
e
m
y
o
p
m
e
n
u

e
g
a
r
e
v
A

5

0

PLPL
PLPLPLPLPLPLPL
PLPLPLPLPLPLPL
PLPLPLPLPLPLPLPLPLPLPLPLPL
PL
PLPLPLPL
PLPLPLPLPLPLPLPLPLPLPLPLPLPL
PLPLPLPLPLPLPLPLPLPLPLPLPL
PLPLPLPLPLPLPLPLPLPLPLPLPL
PLPL
PLPLPL

SKSKSKSKSKSKSKSKSKSKSKSK
SKSKSKSKSKSKSKSKSK
SKSKSKSK
SKSKSKSKSKSKSKSKSK
SKSKSK
SKSK
SKSKSKSKSKSKSKSK
SKSKSKSKSKSKSK
SKSK
SKSKSKSK
SKSKSK

Table II.1.1:

Reform intensity and country characteristics:
cross-country correlations

LTLTLTLTLTLTLTLTLTLTLT
LTLTLTLTLTLTLTLTLTLTLTLTLT
LTLTLTLTLTLT
LTLTLTLTLTLTLTLT
LTLTLTLTLT
LTLTLTLT
LTLTLTLTLTLTLT
LTLTLTLTLTLTLTLT
LTLTLTLTLTLTLT
LT
LTLTLTLT

LVLVLVLVLVLVLVLVLVLVLV
LVLVLVLVLV
LVLVLVLVLV
LVLVLVLVLVLVLVLVLVLVLVLVLVLV
LVLVLVLVLVLVLVLVLVLVLVLV
LVLVLVLVLV
LVLVLVLVLV
LVLVLVLVLVLV
LVLVLVLVLVLVLV
LVLVLVLVLVLV
LV

EEEEEEEEEE
EEEEEEEEEEEEEEEEEEEEEEEE
EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
EE
EEEEEEEE
EEEEEEEEEE
EE
EEEE
EEEEEE

FIFI
FIFIFIFIFIFIFIFIFIFIFIFIFI
FIFIFIFIFIFIFIFIFIFI
FIFI
FIFIFIFI
FIFIFIFI
FIFIFIFIFIFIFIFIFIFIFIFIFI
FIFIFIFIFI
FIFIFIFIFIFIFIFI
FIFIFIFIFIFIFIFIFIFIFIFIFIFI
FIFIFIFIFIFIFIFIFIFI

DEDE
DEDEDEDEDEDEDEDE
DEDEDEDEDEDEDEDEDEDEDEDEDEDEDEDEDEDEDEDE
DEDEDEDEDE
DEDEDEDEDEDEDEDE
DEDEDEDEDE
DEDEDEDEDEDEDEDEDEDE
DEDEDEDEDEDEDEDEDEDE
DEDEDEDEDEDEDEDE
DEDEDEDEDEDEDEDEDEDEDE
DEDEDEDEDE

HUHUHUHUHUHUHUHU
HUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHU
HUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHUHU
HUHUHUHUHUHUHUHUHUHUHUHU
HUHUHUHUHU
HUHUHUHUHUHUHUHUHUHUHUHU
HUHUHUHUHUHU
HUHUHUHUHU
HUHU
HUHUHU
HUHUHUHU

CZCZCZCZCZCZ
CZCZ

IEIEIEIEIEIEIEIE
IEIEIEIEIEIEIEIEIEIEIEIEIEIE
IE

SESESESESESE
SESESESESESESESESESESESESESESE
SESESESESE
SESESESESESESESESESE
SESESESESESESESESESESE
SESESESESESESESESESESESE
SESESESESESE
SESESESE
SESESESESESE
SESESESESE
SESESESESESE

MTMTMTMT

RORORORORORORORORO
RORORORORORORO
RORORORORO
RORORORORORORORORO
RORORORORORORORO
RORORORORORORORORORORORORORORORO
RORORORORORO
RORORORORORORORORO

UKUKUKUKUKUKUK
UKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUK
UKUKUKUKUKUKUKUKUKUKUKUKUK
UKUKUKUKUKUKUKUKUKUK
UK
UKUK
UKUKUKUKUKUKUKUKUKUK
UKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUKUK
UKUKUKUK
UKUKUK

ELELELELELELELELELELELELELELELELELELELELELEL
ELELELELELELELEL
ELELELELELELELELELELELELELELELELELELELELELELELELELEL
ELELELELELEL
ELELELELELEL
ELEL
ELELELELELELELELELEL
ELELEL
ELELELELELELEL
ELEL
ELELELELELELELELELELELELEL
BGBGBGBGBGBGBGBGBGBGBG
BGBGBGBGBG
BGBGBGBGBGBGBG
BGBG
BGBGBGBGBGBGBGBGBGBG
BGBGBGBGBGBG
BGBG

PTPTPTPTPTPTPTPTPTPTPTPTPTPT
PTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPTPT
PTPTPTPTPTPTPTPTPTPTPT
PTPTPTPTPTPTPTPTPTPTPTPTPTPT
PTPTPTPTPTPTPTPT
PTPTPTPT
PTPTPTPTPTPT
PTPTPTPTPTPT
PT
PTPTPT
PTPTPT
FRFRFR
FRFRFRFRFRFRFRFRFRFRFRFRFRFR
FRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFR
FRFRFRFRFRFRFRFRFRFR
FRFRFRFRFRFRFRFRFRFRFRFRFR
FRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFRFR
FRFRFRFRFRFRFRFRFRFR
FRFRFRFR
FRFRFRFRFR
FRFRFRFRFRFR
FRFRFRFR

ITITITITITITITITITITITITIT
ITITITITITIT
ITITITITITITITITITITITITITITIT
ITITITITITITITITITITITITITITITITITITITIT
ITITITITITITIT
ITITITITITITITIT
ITITITITIT
ITITITITITITITITITIT
ITITITITITITITITIT
ITITITIT
ITITITITITITITITITITIT

ESESESESESESESESESESESESESESES
ESESESESESESES
ESESESESESES
ESESESESESESESESESESESESESESESES
ESESESESESESESESESESESESESESESESESESESESESESES
ESESESESESESESESESESESESES
ESESESESESESES
ESESESESESESESESESESESESESESES
ESESESESESESESESESESESESESES
ESESESESESESESESESESESESESESESESESES
ESESESESESESESESESESES

BEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBEBEBEBEBEBEBE
BEBEBEBEBEBEBE

SISISISISISISISISISISISI
SISISISISISISISISISI
SISI
SISISISISI
SISI
SISISI
SISISISI
SISISI
SISI
SISISI
SI

DKDKDKDKDKDK
DKDKDKDK
DKDKDKDKDKDKDKDKDKDK
DK
DKDK
DKDK
DKDKDKDKDKDKDK
DKDKDKDKDKDK
DKDKDKDKDK
DKDK
DKDKDK

CY
CYCYCYCYCYCY
CYCYCYCYCYCYCY
CY
CYCYCYCY
CY
CYCY
CYCYCYCY
CYCYCY
CY
CY

LULULULULULULULULULULU
LULULULU
LULULULULULULULULULU
LULULULULULULU
LULULULU
LULULULULULU
LULULULU
LU
LULULULULU
LULU
LULU

NLNLNLNLNL
NLNLNLNL
NLNLNLNLNL
NLNLNLNLNLNLNLNLNLNLNLNLNLNLNL
NLNLNLNLNLNL
NLNLNLNLNLNLNLNLNLNLNLNLNLNLNLNL
NLNLNLNLNLNLNLNLNL
NLNLNL
NLNLNL
NLNLNLNLNLNL
NLNLNLNLNL

ATATATATATAT
ATATATATATATATATATATATATAT
ATATATATATATATATATATATATATATATAT
ATATATATATAT
ATATAT
ATATATATATATAT
ATATATATATAT
ATATATATATATATAT
ATATATATATATATATATAT
ATATATATAT
ATATATATATATATATATATATAT

5

10

Average number of reforms, 2000-2010

Total number
of reforms

Number of
employment-
friendly reforms

Number of other
reforms

Structural factors
Tax wedge
Unemployment benefits
spending g (% GDP)
EPL indicator, overall EPL
Collective bargaining coverage
Labour market outcomes
Unemployment rate
Share of temporary employment 
(% total)

0.5887

0.3782

0.2788
0.2528

0.3138

0.373

0.658

0.5716

0.3741
0.3969

0.2988

0.4631

0.4496

0.0708

0.1033
0.0975

0.2651

0.1235

15

Share of long-term
unemployment (% total)

0.0702

0.0006

0.1845

Source: DG ECFIN LABREF database, Eurostat

relevant 

fiscal  stance.  Correlations  are 

A number  of  additional  cross-country  correlations
appear  of  interest,  as  reported  in  Table II.1.1. 
Country-specific 
factors  are  distinguished  as
follows:  structural  characteristics  affecting  labour
market  outcomes,  labour market  outcomes,  and
other  macro-fiscal 
characteristics,
including  income  per  capita,  GDP  growth,  debt
and 
reported
separately  for  employment-friendly  and  other
reforms.  As  expected,  overall  reform  intensity  is
higher  in  countries with  more  regulated  labour
markets  (EPL),  a  higher  tax wedge  on  labour,  a 
higher coverage of collective bargaining, and more
generous  unemployment  benefits.  However,  these
correlations  hold  most  notably  for  employment-
friendly reforms.

frequent 

Unsatisfactory labour market  outcomes  are  also
correlated with more intense reform activity. Most
importantly, 
in
reforms  are  more 
countries  with  high  unemployment. Interestingly,
reforms in high-unemployment countries are more
frequent  in  both  directions:  employment-friendly 
and other reforms. One the one hand, more support
to  the  unemployed  is necessary,  which  requires
more generous benefit systems. On the other hand,
employment-friendly  policies, ALMPs,  and  an 
efficient design of benefit systems are necessary. 

74

Other macro-fiscal variables 
Real GDP per capita, euros
Real GDP growth
Government debt / GDP
Change in primary cyclically-
adjusted budget balance

-0.117
-0.499
0.7797

0.0351
-0.5638
0.7762

-0.4802

-0.4027

-0.2833
-0.2619
0.6485

-0.373

(1) Rank correlations of averages over the period 2000-2010.
Source: Tax wedge: European Commission-OECD Tax and
Benefit Project; Unemployment benefit spending: Eurostat;
EPL:OECD; Collective bargaining coverage: ICTWSS
database; Labour market outcomes: Eurostat; Other macro-
fiscal variables: ECFIN AMECO database.

Reforms  appear  to  be  less frequent  in  countries
with  high  growth  rates,  irrespective  of  their
direction. As for income per capita, the relation is
negative, but mostly for other reforms. This result
is  to  a  large  extent  driven  by  catching  up  and
former  transition  economies  that  reformed  their
labour  market  systems  by introducing  new
instruments  of workers’
protection.  Finally,
countries with higher government debt and a fiscal
stance  oriented  towards  the  improvement  of  the
state of public finances implement more reforms.

Aggregate  reform  indicators  do  not  permit  to
assess how different types of reforms are driven by
different  determinants.  Moreover,  correlation
analysis helps to shed light on some stylized facts,
without however providing sufficient elements for
interpreting  findings.  Achieving  additional  insight
requires  looking separately  at  reforms  in  different
domains, taking into account the time dimension in 
to  cross-country  comparisons,  and
addition 

 
 
Part II

Thematic chapters

Box II.1.2: Investigating the determinants of labour market reforms with count data

Econometric analysis can help identifying the determinants of the number of reforms taking place in a given 
country, in a given year. The first step in this type of analysis is to ensure a broadly homogenous sample of 
reforms  in  terms  of  expected  driving  factors:  in  absence  of  a  sufficient  degree  of  homogeneity,  no 
discernible  pattern  may  become  visible.  To  this  purpose,  the  analysis  refers  only  to  employment-friendly 
reforms. The analysis is also conducted separately by selected policy domains.

The dependent variable used in the analysis is the number of employment-friendly reforms concerning EPL, 
unemployment  benefits,  labour  taxation  (reforms  selected  reduce  the  tax  wedge),  wage  bargaining  (the 
reforms selected are those where government intervention is aimed at reducing downward rigidities). This 
type of count data (bounded to be non negative and integer) do not allow the use of standard econometrics. 
A  Poisson  regression  is  therefore  applied,  which  permits  to  estimate  the  probability  of  observing  a  given
number of reforms within a time interval as a function of a set of explanatory variables assuming a Poisson 
distribution for the underlying stochastic events.

Since some relevant reform determinants may be slow-moving variables, and in light of the relatively short 
time  series  available  (10  years),  rather  than  estimating Poisson  conditional  fixed  effect  regressions,  cross-
section and time series data are pooled, while ensuring robust error terms with respect to non-independence 
within country clusters. This allows assessing reform determinants both along the time series and the cross-
section dimensions.

The chosen specifications have the following form for each reform domain:

log(

NE
(

/

X

))

it

−
1

ti
,

∑+=
a

K

j

=
1

β
j

X

it

−
1

(1)

where i and t denote, respectively, countries and time periods, j denotes a generic explanatory variable, and 
where  N and  X denote,  in  turn,  the  reform  dependent  variable  and  the  explanatory  variables  (variables 
labelled with an upper bar are multi-dimensional vectors). Note that what appears at the right hand side of 
(1)  is  the  logarithm  of  the  conditional  expected  value  for  the  reform  variable,  so  that  the  effect  of  the 

explanatory variables is not linear, i.e., their marginal impact changes depending on the level of 

tiX ,

. The 

assumption for the distribution of 

tiY ,

is that it follows a Poisson with rate (mean and variance) given as in 

(1).  The  explanatory  variables  are  all  lagged  one  period  to  tackle  the  risk  of  reverse  causation  and  are 
selected on the basis of a general-to-specific approach: starting from a general specification that includes a 
large  set  of  explanatory  variables,  the  least  significant  are  eliminated.  Lagged  variables  of  the  dependent 
variable are generally highly non-significant, except for the labor taxation domain, which is consistent with 
the  assumption  of  independence  among  reform  intensity  observations  which  is  implicit  in  the  Poisson 
model.  Public  finance  variables  (Government  debt  and  the  change  in  the  primary  cyclically-adjusted 
balance) are not statistically significant.

analysing the impact of several explanatory factors
at the same time.

With  a  view  to  address  the  above  limitations, 
regression analysis on the panel of all EU countries 
are  carried  out,  separately  for  different  policy 
domains:  EPL,  labour  taxation,  unemployment 
benefits,  wage  bargaining.  To  keep  the  sample 
used  in  the  analysis  homogenous  in  terms  of 
reform  objectives,  the  reform  variable  used  is  the 

indicators 

employment-friendly 

of 
reforms, 
number 
separately 
in  each  domain.  In  contrast  with 
existing  analogous  exercises  making  use  of 
synthetic 
structural 
conditions  (e.g.,  Hoj  et  al.,  2007)  which  employ 
standard least square regression models, non-linear 
models  for  count  data  become  necessary  in  the 
present analysis. Box II.1.2 describes the empirical 
strategy and the estimation method followed.

summarizing 

75

European Commission

Labour Market Developments in Europe, 2012

Table  II.1.2 reports  the  results  of  the  empirical
analysis  of  reform  determinants.  EPL  reforms
making  the system  more  “flexible”  appear  more
likely  in  sclerotic  (low job  finding  rates)  and
segmented (high share of temporary labour) labour
markets.  EPL  reforms  are  also  less  likely  in
conditions of low growth.

Table II.1.2: Determinants of labour market reforms

Explanatory variables
Lagged dependent 
variable

Job finding rate

Share of temporary
employment

Tax wedge on labour

Employment rate

Net replacement rate

Unemployment benefit 
duration

Share of long-term
unemployment
Wage share

Unemployment

Real per-capita GDP, 
euros
Real GDP growth

Constant

Observations

(1)

EPL

-0.128
[2.38]**
8.151
[4.11]***

(2)
Labour
taxation
0.093
[1.86]*

0.037
[5.07]***
-0.039
[3.00]***

0.017
[3.83]***
0.047
[3.06]***
0.278
[0.36]
226

-0.078
[2.61]***
-0.865
[2.03]**
218

(3)
Unemployment 
beneftis

(4)
Government 
intervention

3.953
[1.43]
0.015
[1.50]
0.088
[4.15]***

0.083
[4.65]***
-0.09
[3.38]***
-5.913
[2.59]***
95

0.091
[2.10]**
0.125
[3.34]***

-0.06
[1.47]
-7.828
[2.84]***
236

(1) Dependent variables: number of employment-friendly
reforms. All explanatory variables are lagged one period.
Estimation method: Poisson regressions, pooled cross section
time series data. Standard errors robust with respect of non
independence within countries. Robust z statistics in
brackets. * significant at 10%; ** 5% and  *** 1%.
Source: Tax wedge, unemployment benefit et replacement 
rate and duration: European Commission-OECD Tax and
Benefit Project; Job finding rate; elaborations on Eurostat 
data; Other labour market outcomes: Eurostat; Other
macro-fiscal variables: ECFIN AMECO database

Reforming labour taxation appears to be a process
that gradually unfolds over time, as revealed by the
significant  coefficient  of  the  lagged dependent
variable: reforms reducing labour taxation this year
are more likely the higher the number of the same
type  of  reforms  the  previous year. Labour  tax 
reforms are, as expected,  more frequent if starting
from  a  situation  with  a  high  tax  wedge  on  labour
and with a low employment rate. It also turns out
that  labour  tax  reforms  are  more  frequent  in high
income countries and during good times, probably
in  light  of  the  stronger  budgetary  room  for
manoeuvre.

76

insurance

Unemployment benefit  systems are more likely to
be  reformed  the  higher  is  the  generosity  of
unemployment
(both  net
replacement rates and duration) and the higher the 
share  of  long-term  unemployment.  This  type  of
reforms is also more likely in countries with higher
income per capita and periods of low growth.

schemes 

line with  expectations,  reforms 

In 
in wage
bargaining  are more  frequent  starting  from  a
situation where  a  large fraction  of value  added
accrues to labour and when the unemployment rate 
is high. It also appears that low growth conditions
are  more  conducive  to  this  type  of  reforms,
although  the  coefficient  does  not  reach  statistical
significance.

Overall, the analysis of LABREF data confirms the
view that reforms are carried out mostly when and
where  justified  both  on  the ground  of structural
regulatory  and institutional factors  and  on  the
ground  of  labour market  outcomes.  Other macro-
fiscal conditions play a role, which is however less
clear-cut.  Reform  activism  is  generally  associated
with  low  GDP  growth,  but  not  for  all  policy
domains.  Countries  with  higher income per-capita
are  more  likely  to  deregulate  labour markets  in
selected  domains.  Public  finances  also  appear  to
in  cross-country  correlation 
play some 
analysis  (countries with  high  public  debt  exhibit 
more  reform intensity, while  countries  taking  a
tougher  fiscal  consolidation stance  reform  less),
in
which 
regression analysis conducted separately by policy
domain.

is however  not  clearly  confirmed 

role 

1.5.  ASSESSING  THE  IMPACT OF  REFORMS:

SOME PRIMA-FACIE EVIDENCE 

This  section discusses  the  effect  of  reforms  on
outcomes. A thorough assessment of the impact of
changes  in  policy frameworks  requires  the  use  of
disaggregated  data:  only  in  this way  it  is  possible
to identify the effect of reforms by comparing the
specific outcome variables affected by the reforms
between 
sectors,
those  population  groups, 
individuals,  that  are  concerned  and  those  that  are
not  (e.g,  Imbens  and  Woolridge,  2009). The
findings from  the  previous  analysis also  show
quite  clearly  the  risks  of  reverse  causation when
running  analysis  on  aggregate  outcome  variables:
reforms,  and
unsatisfactory  outcomes 

trigger 

reforms at the same time produce effects on those
outcomes  over  time.  In  light  of  these  arguments,
the  LABREF  database  has  been  used  in  past
analysis  to  assess  policy  effects with the  help  of
disaggregate data, including the impact of reforms
across  different  gender  and  age  groups  (Arpaia  et
al,  2009)  and  on marginally  attached workers
(European Commission, 2008).

their 

limitations,  attempts

Notwithstanding 
to
assess the impact of reforms on macro data are not
uncommon, not only because easier to implement,
but  because helpful  in  providing  a  synthetic,
prima-facie gauge  on  the  direction  and  order  of
magnitude  of  reform  effects  (e.g.,  Layard  and
Nickell,  1999;  Belot  and  Van  Ours,  2004;
Bassanini  and  Duval,  2006,  Bouis  and  Duval,
2011).

With  a  view  to  shed some  light  on  the  impact  of
reforms,  and  without  pretence  of  providing 
definitive  answers,  panel  regressions  were  run
separately  for  selected  labour market  outcome
variables:  the  share  of  temporary  labour,  the  job
the
finding 
unemployment rate. The analysis aims at assessing
whether  reforms  play  a  role 
the
evolution of these variables over time. 

participation 

in  driving 

rates, 

rate, 

the 

The  reform  indicator  used  in  the  analysis  is  the
direction  score  for  selected  reforms,  i.e.,
the
algebraic  sum  of  the  direction  indicator  for  all
measures taken in a given country in a given year
(see  Box II.1.3).  This  indicator  aims  at  capturing
the  extent
to which  policy  action  in  a  given
country,  in  a  given  year,  in  a  given  domain,
affected 
the  underlying  structural  conditions.
Hence,  the  purpose  of  the  statistical  analysis  is  to
test whether  the  labour market  outcomes  that  are
expected  to  be  more  closely linked  to  the  various
reform indictors actually move in an employment-
the 
friendly  direction.  Box 
empirical methodology followed.

II.1.3 describes 

in  Table

Results  are  displayed 
II.1.3.  The 
preponderance  of  employment-friendly  reforms
implies a more negative value for the each reform
direction  score.  The  presence  of  3  lags  of  the
reform  direction  score  indicator  allows  evaluating
how the impact of reforms unfolds over time.

A variable  capturing  reforms  addressing labour
(employment-friendly 
market 

segmentation 

Part II

Thematic chapters

reforms in the EPL for regular contracts net of the
same  type  of  reforms for  temporary  contracts)
exhibit  the expected  sign  in  driving  the  share  of
temporary  employment  in the  economy.  The 
that
coefficient 
employment-friendly 
reduce
precariousness,  although  it  reaches  a  degree  of
statistical  significance  close to  10  per  cent  only 
after 3 years.

is  positive, which 

indicates 

reforms 

Table II.1.3:

Reform effects on selected outcome variables

(1)

(2)

(3)

(4)

Dep. variable (1 lag)

Dep. variable (2 lags)

Dep. variable (2 lags)

EPL reforms addressing 
segmentation (1 lag)

EPL reforms addressing 
segmentation  (2 lags)

EPL reforms addressing 
segmentation  (3 lags)
EPL reforms (1 lag)

EPL reforms  (2 lags)

EPL reforms  (3 lags)

Labour tax reform (1 lag)

Labour tax reform (2 
lags)

Labour tax reform (3 
lags)

Unemployment benefit 
reform (1 lag)

Unemployment benefit 
reform (2 lags)

Unemployment benefit 
reform (3 lags)
Social benefits (1 lag)

Social benefits (2 lags)

Social benefits (3 lags)

Job 
finding 
rate

Activity rate, 
year-on-
year change

Unemployment 
rate, year-on-
year change

-0.188
[1.53]

0.582
[6.02]***
0.057
[0.46]
-0.308
[2.45]**

0.402
[4.83]***
0.055
[0.41]
-0.371
[2.48]**

Share of
temporary
employment, 
year-on-year
change

0
[0.04]
0
[0.40]
0.001
[1.61]

-0.12
[1.13]
-0.131
[1.26]
0.007
[0.05]

-0.103
[2.18]**
-0.089
[1.78]*
-0.009
[0.18]

-0.002
[0.03]
-0.011
[0.16]
-0.114
[1.43]
-0.11
[0.45]
193
0.17

0.03
[0.66]
0.084
[0.98]
0.168
[1.79]*
-0.011
[0.18]
0
[0.00]
0.182
[1.52]

0.149
[0.33]
171
0.62

Constant

Observations
R-squared

0.001
[0.71]
193
0.12

5.429
[4.58]***
167
0.53

(1) Reform variables are the algebraic sums of binary
direction indicators  of all measures taken in a given country
and a given year (for employment-friendly reforms the 
direction indicator is set at -1, for other reforms at 1). EPL
reform addressing segmentation: employment-friendly  EPL
reforms for permanent and  other reforms for temporary
contracts. All specifications include country and year
effects. Estimation method: least squares dummy variables.
Standard errors robust with respect of non independence 
within countries. Robust t statistics in brackets. * significant at
10%; ** 5%; *** 1%.
Source: Commission Services.

Employment-friendly  EPL  reforms  at  large  (both
permanent  and  temporary  contracts) have  instead
the  expected  positive  impact  on  the  job  finding 

77

European Commission

Labour Market Developments in Europe, 2012

Box II.1.3: Assessing the impact of reforms from the LABREF database on aggregate 
variables

The  empirical  specification  chosen  for  the  estimation  of  the  effect  of  reforms  exploits  the  time  series 
properties  of  selected  labour  market  outcome  variables.  The  idea  is  that  of  augmenting  simple  auto-
regressive models for stationary variables with lags of reform indicators that are ex-ante expected to have a 
potential  effect.  By  looking  at  the  coefficients  of  the  various  lags  of  the  reform  indicator  it  is  possible  to 
gauge the intensity and direction of the impact of reforms, and their evolution over time.

The reform variable chosen is the direction score for selected reforms. Hence, the indicator represents the 
number of employment-friendly reform measures carried out in a given country in a given year, minus the 
number of other reforms. The choice of this indicator is dictated by the need, when assessing the impact of 
reforms,  of  taking  account  not  only  of  the  intensity  of  the  reform  action,  but  also  of  the  likely  impact  on 
underlying regulations and institutions. 

Since  the  time  series  dimension  of  the  LABREF  database  is  limited,  the  estimation  is  carried  out  over  a 
whole panel of EU countries. To ensure the stationarity of the outcome variables selected, time differences 
are  performed  when  necessary.  Lags  of  the  dependent  variables  are  added  to  the  specification  until  they 
remain  statistically  significant.  To  capture  common,  time-varying  factors  that  may  impact  the  dependent 
variable  (e.g.,  global  economic  economic  conditions,…)  time  fixed  effects  are  included  in  addition  to 
country fixed effects.

The selected specification for a generic variable Y is as follows

Y
ti
,

=

α

+

L

∑

l

=
1

β
l

Y
,
ti

+

3

∑

j

=
1

k
β
j

j
R
ti
,

+

εθη
t
ti
,

+

+

i

(1)

where i, and t denote, respectively, country and time period, where L is the number of lags of the dependent 
variable,  R is  the  reform  direction  score  indicator,  and  where  η and  θ are,  respectively,  country  and  year 
effects, while ε is white-noise disturbance.

rate,  as  revealed  by 
the  negative  regression 
coefficient:  lower  EPL  restrictions  tend  to  impact 
positively  on  job  creation,  as  measured  by  the 
hazard  rate  at  which  unemployed  find  a  job.  The 
effect  is  not  statistically  significant  at  10  per  cent 
but,  after  2  years,  the  t  tests  reveal  a  quite 
satisfactory significance level.

Activity  rates  are  put  in  relation  with  tax  and 
benefit  reforms.  Reforms  reducing  the  tax  wedge 
have  a  statistically  significant  impact  on  the 
activity  rate,  which  fades  away  gradually  over 
time.  Reforms  reducing  the  generosity  of  social 
benefits also have the expected positive impact on 
activity rates (negative regression coefficient), but 
effects  do  not  reach  statistical  significance  and 
take time to materialize (growing from the first to 
the third year after the reform), probably in light of 
the  fact  that  these  reforms  mostly  concern  new 
beneficiaries  or  foresee  a  gradual  phasing  out  of 
benefits for current beneficiaries.

Tax  wedge  and  unemployment  benefit  reforms 
appear  to  help  reducing  the  unemployment  rate. 
Regarding  the  tax  wedge,  the  effect  achieves 
statistical  significance,  but  only  over  time  (the 
third  year  after  reform).  This  result  contrasts  that 
found in the case of participation rates (immediate 
impact of tax wedge reforms) and could be linked 
to  the  fact  that,  in  case  of  reforms  reducing 
personal  income  taxation,  employment  decisions 
by firms are affected only with the necessary delay 
necessary for the tax cut to feed into reduced wage 
demands by workers. Probably, analogous reasons 
(delays  for  benefit  reductions  translating  into 
reduced  wage  demands  and  higher)  explain  the 
fact that also the effects of unemployment benefit 
reforms take time to materialize. 

It  is important  to  take  these  results  with  the 
necessary degree of caution. Aggregate approaches 
to  assess  the  impact  of  reforms  have  a  limited 
power in identifying the effect of reforms because 
they do not allow measuring the impact on what is 

78

the 

reform 

separating 

the  effects  between 

directly  changed by  policy  measures  and  do  not 
permit 
the 
population  affected  by  the  reform  and  the  one 
which is instead not affected. Hence, rather than a 
proper  quantification  of 
impact, 
aggregate  analysis  provide  a  statistical  account  of 
the extent to which the dynamics of relevant labour 
market  outcome  variables  was  affected  by  the 
adoption  of  a  certain  number  of  reforms  of  a 
certain type. In light of the relatively small sample 
reform 
size  and 
is  not 
indicators  and  outcome  variables, 
statistical 
cases 
surprising 
significance is not reached. 

link  between 
it 

in  many 

indirect 

that 

the 

Nevertheless,  the  results  from  aggregate  analysis 
presented in this section appear in light of a-priori 
expectations of reform impact, which is reassuring 
in that confirms priors often implicitly or explicitly 
underlying reform action by governments or policy 
advice  and  recommendations  by  experts,  think 
tanks  and  policy  institutions.  The  results  also 
provide  a  number  of  new 
insights,  notably 
regarding  the  time  pattern  of  reform  effects,  that 
deserve further investigation.

1.6.  CONCLUSIONS

the 

recent  past  calls 

This  increased  reform  activism  recorded  by  EU 
countries  over 
for  a 
proportionate increased effort to track the record of 
past reforms and assess their features, determinants 
and  effects.  Such  an  assessment  is  complex,  most 
notably in light of the very differentiated character 
of the  multi-faceted set of  measures that normally 
fall under the broad heading “reform”. 

The  rich  information  contained  in  the  LABREF 
database,  developed  by  DG  ECFIN  of 
the 
European  Commission  in  cooperation  with  the 
tracking 
Economic  Policy  Committee,  allows 
labour  market  reforms  in  the  EU  over  the  past 
decade. 

Descriptive  analysis 
noteworthy trends and regularities:

reveals  a  number  of 

• Over the  whole decade, reforms do not appear 
to  be  strongly  synchronised  across  countries, 
which may reflect that measures are often taken 
in response to idiosyncratic shocks. 

Part II

Thematic chapters

• However, 

there 

that 
is  some 
countries with similar institutional settings tend 
to follow analogous reform patterns.

indication 

• Moreover,  the  2008  crisis, triggered  increased 
policy  activism  in  most  policy  domains  in  a 
large number of EU countries. The crisis acted 
as a common shock and required simultaneous 
responses. External pressure from  markets and 
sovra-national institutions, notably the EU, and 
increased economic uncertainty, may also have 
helped  governments  to  publicly  commit  and 
swing  away  part  of  the  political  responsibility 
of unpopular policies. (24) 

• A  higher  incidence  of  reforms  with  macro-
(EPL,  unemployment 
structural 
benefits,  wage  setting)  is  observed  with  the 
crisis. 

relevance 

• With  the  crisis,  a  tendency  for  reforms  to 
become  more  frequently  aimed  at  supporting 
employment  by  easing  regulations  or  welfare 
benefits generosity is also observed. 

• Correlation  and  regression  analysis  shows  that 
reforms tend to be more frequently carried out 
when  and  where  justified  by  unsatisfactory 
labour  market  outcomes (notably  high  and 
growing  unemployment)  and  by  outdated 
regulations and institutions. Other macro-fiscal 
conditions play a role which is less clear-cut. 

• Statistical  analysis  of  the  effects  produced  by 
selected  reforms  on  aggregate  labour  market 
outcomes  is  supportive  of  common  priors:  tax 
and  benefit  reforms  tend  to  be  followed  with 
some lags by improved activity rates and lower 
unemployment; EPL reforms are followed by a 
reduced  share  of  temporary  contracts  and 
increased job-finding rates. 

Further  analysis  on  the  LABREF  database  could 
aim  at  assessing  the  effect  of  reforms  on  labour 
market outcomes using micro-level data that allow 
better  identifying  the  impact  of  the  policy  across 
population groups.

(24) Buti et al. (2010), Gancia, G.; A. Bonfiglioli (2011).

79

2. MACROECONOMIC IMPLICATIONS OF EMPLOYMENT

PROTECTION LEGISLATION

2.1. 

INTRODUCTION

to 

(CSRs) 

to  enhance 

In  2011  some  Member  States  received  Country-
Specific  Recommendations 
revise 
selected  features  of  EPL  to  reduce  segmentation 
and enhance labour market flexibility. In particular 
measures  were  advocated 
labour 
market  flexibility  to  allow  for  a  better  use  of 
temporary  contracts  (Lithuania)  or  reduce  the 
asymmetries  in  rights and  obligations  between 
permanent  and  temporary  contracts  (Slovenia, 
Spain,  France,  Italy).  In 
the  framework  of 
Economic  Adjustment  Programmes  Greece and 
Portugal are  in  the  process  of  revising  their  EPL 
system  with  a  view  to  foster  job  creation,  tackle 
segmentation, and enhance the adjustment capacity 
of the economy.

The  aim  of  this  chapter is  threefold.  First,  it 
provides  an  overview  of  key  concepts  to  fully 
appreciate  the  multi-faceted  aspects  of  EPL  and 
describes the  main characteristics of EPL systems 
across  EU  countries.  Second,  it  discusses  the 
effects of EPL on labour markets on the economy 
at  large  on  the  basis  of  existing  literature  and  in 
light  of  original  analysis.  In  particular,  there  will 
be a discussion of the channels through which EPL 
can 
external 
adjustment. Third, the note discusses which factors 
need  to  be  taken  into  account  when  assessing 
reforms  needs  in  the  EPL  domain  and  how  can 
desirable reform paths be characterised depending 
on 
institutional 
characteristics.

affect  growth  potential 

economic 

countries' 

and 

and 

The  remainder  of  the  chapter is  structured  as 
follows.  In  the  next  section  basic  facts  and 
definitions  about  EPL  are  reviewed.  In  section  2 
the  EPL  characteristics  of  EU  countries  are 
compared  and  discussed.  Section  3  reviews 
existing studies on the effects of EPL and presents 
fresh  analysis  on  the  topic.  In  section  4  the 
discussion  focuses  on  the  identification  of  reform 
needs  and  on  avenues  for  desirable  reform 
strategies in EU countries.

80

2.2.  KEY CONCEPTS ABOUT EPL

2.2.1. Basic 

facts 

about 

employment 

protection legislation

refers 

Employment  Protection  legislation  (EPL)  consists 
that  define  private 
of  rules  and  procedures 
employment 
to 
relationships.  EPL 
provisions  defining  the  lawfulness  of  dismissal, 
formal and procedural requirements to be followed 
in  case  of  individual  or  collective  dismissals, 
payments to workers for early contract termination 
and  remedies  to  deal  with  the  consequences  of 
unfair dismissal, hiring restrictions (e.g. favouring 
specific  groups  of  disadvantaged  workers  or 
limiting specific types of contracts). 

to 

(the 

(e.g., 

2010). 

reduce 

The  economic  rationale  of  EPL  is  to  address  the 
risks  for  workers  associated  with  the  lay-off 
process 
Since 
Pissarides, 
unemployment  risks  can  hardly  be  fully  covered 
by  the  insurance  market,  risk-averse,  liquidity-
constrained  employees  may  demand  employment 
protection 
income  volatility  and 
employers may agree to provide such protection in 
exchange  of 
so-called 
reduced  wages 
"bonding  argument").  Under  perfect-information, 
competitive environment, EPL would be voluntary 
and  efficient,  and  there  would  be  no  need  for 
minimum  mandatory  employment  protection. 
Under  imperfect  information,  however,  cases  of 
under-provision  of  employment  protection  may 
arise,  giving  raise  to  an  economic  reason  for 
mandatory minimum EPL (see, e.g., Blanchard and 
Tirole,  2003). (25)  An  additional  economic  reason 
why  EPL  may  be  needed  is  to  address  the 
externalities  associated  with 
the  break-up  of 
employment relationships. (26)

(25) When  employers  have 

incomplete  knowledge  about 
workers'  ability,  job  applicants  tend  to  ask  for  low  job 
protection,  with  a  view  to  signal  they  are  high-quality 
workers  who  do  not  expect  being  easily  dismissed 
(signalling  problem).  Similarly,  firms  tend  to  undersupply 
EPL, since offering a high degree job security would attract 
the  less  qualified  and  motivated  workers,  difficult  to  fire 
once hired (adverse selection problem).

(26) Workers that are laid off, if not quickly re-employed, may 
lose  skill  and motivation,  thus  becoming  hardly  re-
employable.  Employers,  when  deciding  about  lay  offs  do 
not take into account the fact that their decision may have 
implications in terms of effective labour inputs availability 
for the whole economy.

Part II

Thematic chapters

The  existence  of  EPL  is  not  only  justified  on 
economic  grounds.  Views  concerning  workers' 
rights  and  fair  labour  relations  also  play  a  relevant 
instance,  dismissals  motivated  by 
role.  For 
discriminatory  reasons  are  generally  considered 
illegal,  while  protection  to  employees  is  generally 
not provided when dismissals are justified by major 
disciplinary reasons. Protection against dismissal is 
also  recognised  in  ILO  Conventions,  in  the  EU 
charter of fundamental rights, and in EU law. (27)

Specific EPL features are the outcome of different 
legal  and  institutional  traditions. Countries  with 
civil  and  common 
traditions  provide 
law 
employment  protection  in  different  ways.  In  the 
former, EPL tends to be regulated by law, while in 
the  latter  it  relies  more  on  contracts  and  private 
litigations.  In  common  law  countries,  courts  have 
ample  judicial  discretion  as  opposed  to  civil  law 
where  procedural  codes  play  a  greater  role. 
Moreover, EPL is an articulated set of institutions 
enshrined  not  only  in  law  but  also  in  collective  
and individual labour contracts.

from  seeking  jobs  than  to  renegotiate  the 
contracts  of  workers  who  are  found  to  be 
unsuitable.  However,  to  avoid  the  risk of 
employers  abusing  of  long  trial  periods,  the 
legislation  often  establishes  maximum  trial 
periods.  In  some  countries,  the  legislation 
allows  deviations  from  the  standard  maximum 
trial  period  by  way  of  temporary  derogations, 
most notably for work-related training. In some 
cases,  the  trial  period  is  disciplined  in  such  a 
way  to  grant  lower  dismissal  costs  at  the 
beginning of the employment relationship. 

• Procedural  requirements and  notice  periods. 
Legislations often require a notice period prior 
dismissal  and  a  written  notification.  Long 
notice  periods  may  have  relevant  monetary 
implications  as  they  imply  involuntary  and 
possibly  unproductive  employment.  In  some 
countries,  failure  to  comply  with  the  notice 
period may give the right to a compensation for 
the earnings  that  the  worker  would  have 
received had this been correctly observed.

2.2.2. Main features of EPL

Individual dismissals, regular contracts

EPL  legislation  generally  contains  a  number of 
conditions that are to be respected by the employer 
for  dismissing  workers.  The  lack  of  respect  of 
these conditions renders the dismissal unfair, with 
the 
implications 
employer  and  rights  to  compensation  to  the 
worker.  The  main  aspects  of  EPL  for  individual 
dismissals for regular contracts are as follows.

terms  of  obligations 

in 

to 

• Probationary  period.  During  the  trial  period 
both  parties  can  terminate  the  employment 
relationship at no costs. Employers may favour 
long  probationary  periods  as  they  find  it 
cheaper  to  discourage  less  qualified  applicants 

right 

(27) The  information and  consultation  of  employees  is  a 
fundamental 
the  Charter  of 
recognised  by 
Fundamental  Rights  of  the  EU  (Art.  27).  The  protection 
against  unjustified  dismissal 
is  a  fundamental  right 
recognised by the Charter of Fundamental Rights of the EU 
(Art.  30)  and  is  subject  to  the  ILO  Termination  of 
Employment  Convention  C  158.  Art.151  and  153  TFEU 
provide  in  particular  that  the  Union  shall  have  as  its 
objectives 
improved 
the  promotion  of  employment, 
working  conditions,  the  information  and  consultation  of 
workers  and 
their 
employment contract is terminated.

the  protection  of  workers  when 

the  worker 

• Reasons for individual dismissal. Most current 
regulations 
employment 
dealing  with 
termination  require  the  fulfilment  of  not  only 
prior procedural  requirements  before  dismissal
to  be 
to 
(like  a  notification 
dismissed),  but  also  impose  an  obligation  on 
the  employer 
the  reasons 
to  substantiate 
justifying  dismissal.  The  cases  for  justified 
dismissal can be: (i) on disciplinary grounds or 
for  personal  reasons,  except  discriminatory 
cases  (e.g.  based  on  age,  gender,  colour, 
religion,  trade  union  activity,  maternity  and 
educational leave,…); (ii) 
economic 
grounds  (extinction  of  the  post,  technological 
change, unsuitability of the worker).

on 

While  dismissals  on  disciplinary  grounds  do  not 
imply compensations to the  worker, dismissals on 
economic  grounds  may  imply  compensations  in 
some  countries.  National  legislation  differs  as  to 
the  scope  of  valid  reasons  for  dismissal  and  the 
discretion  of  judges  in  questioning  employers' 
decisions.  The  valid  reasons  for  dismissal  can  be 
defined  in  a  broad  way,  with  the  advantage  of 
providing  room  to  cope  with  a  disparate  range  of 
situations.  Alternatively,  the  reasons  for  justified 
dismissal could be very detailed, thereby reducing 

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the  scrutiny  of  the  labour  judges  on  employers' 
decisions.

for 

the 

such 

compensation 

law  countries, 

• Consequences  of  unfair  dismissal.  In  common 
law countries employees are often compensated 
via  severance  payments  in  case  of  dismissals 
by law or collective agreement, and a justified 
economic  reason  for  dismissal  may  not  be 
necessary 
(no 
compensation  for  disciplinary  dismissal).  In 
civil 
legislation  often 
prescribes  a  justified  economic  reason  and  if 
the  court  verifies  that  justified  reasons  are  not 
present the employer may have to reinstate the 
employee.  The  payment  of  a  monetary 
compensation as an alternative to reinstatement 
may  be  contemplated  by  the  law  in  some 
countries, and the choice may be given either to 
the employer or to the employee. In addition to 
reinstatement, 
to 
compensate  for  wage  losses  and  the  social 
security contributions unpaid during the period 
between the dismissal and the judgment.  

employers  may  have 

• Design  of  severance  payments.  The  severance 
pay  consists  of  a  lump  sum  payment  to  a 
worker  who  has  been  involuntary  laid-off. 
Severance  payment  entitlements  may  be 
enshrined  in  law  or  be  bargained  in  collective 
agreements. The payment may differ according 
to  the  reason  for  dismissal  (justified  or  not 
justified).  In the  majority  of  the  countries 
severance  payment  exists  in  case  of  dismissal 
for  economic  reasons,  while  they  are  not 
usually due in case of dismissal for disciplinary 
reasons.  The  size  of  severance  payments  is 
often  linked  to  the  number  of  years  of  service 
and  on  the  wage  pay  close  to  the  moment  of 
dismissal. Severance payments  may be subject 
to  a  maximum  cap.  In  some  countries  the  size 
of  severance  payments  is  negatively  linked  to 
the  length  of  the  notice  period  given  to  the 
dismissed employee.

arising  from  the  lay-off  of  many  employees  in  a 
short  time  period,  in  a  specific  geographical  area. 
What  changes  as  compared  with 
individual 
dismissals  is  generally  the  necessity  of  fulfilling 
additional  procedural  requirements  and  the  notion 
of admissible economic dismissal for the dismissal 
to  be  considered 
fair.  Rules  on  collective 
dismissals  concern  a  number  of  elements  as 
follows.

• Definition  of 
collective  dismissal.  The 
legislation  sets 
the  minimum  number  of 
workers dismissed in a given lapse of time, in a 
given  location,  for  the  dismissal  to  qualify  as 
collective.  Often  this  minimum  number  is 
linked to firm/plant size.

• Procedural  and  notification  requirements. 
Employers  are 
to  consult  with 
required 
workers'  representatives when  contemplating 
collective  dismissals,  with  a  view  to  find 
alternative 
possible. 
solutions  whenever 
Employers  are  also  required  to  notify  the 
intention to operate collective dismissals to the 
competent public authority.

• Criteria 

for 

selecting  employees

to  be 
dismissed.  Transparent  and  non-discriminatory 
criteria  may  be  indicated  by  law,  in  collective 
agreements,  or  may  have  to  be  announced  by 
the employer at the moment of dismissal. 

Compensations,  implications  of  unfair  collective 
dismissals.  In  most  cases,  severance  payments 
provided  irrespective  of  the  specific  reason  for 
individual economic dismissal are also due in case 
of  collective  dismissal.  Additional  monetary 
compensations 
of 
unemployment  benefits)  may  have  to  be  provided 
by the  employers.  National  legislations  provide 
alternative  implications  for  the  lack  of  respect  of 
procedural and notification requirements of in case 
of the disrespect of selection criteria for dismissal.

co-financing 

(e.g., 

Collective dismissals

Legislation on fixed-term contracts

Collective  dismissal  procedures  are  triggered  by 
the  simultaneous  dismissal  of  a  number  of 
employees  in  light  of  economic  reasons.  The 
legislation  often  defines  additional  requirements 
on 
in  case  of  collective 
dismissals,  in  view  of  the  social  implications 

the  employers 

to 

EPL  legislation also  deals  with  conditions  under 
which fixed-term contracts can be used and on the 
main  features  of  such  contracts.  Employers  may 
to  use  series  of  fixed-term 
have 
incentives 
rather 
contracts 
for 
regular  contracts, 
than 
to  save  on  dismissal  costs. The 
example, 

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Thematic chapters

Box II.2.1: The construction of OECD EPL indicators

Individual  dismissal  of  workers  with  regular  contracts.  This  index  incorporates  three  main  aspects  of 
dismissal protection: (i) procedural inconveniences that employers face when starting the dismissal process, 
such  as  notification  and  consultation  requirements;  (ii)  notice  periods  and  severance  pay,  which  typically 
vary  by  tenure  of  the  employee;  and  (iii)  difficulty  of  dismissal,  as  determined  by  the  circumstances  in 
which it is possible to dismiss workers, as well as the repercussions for the employer if a dismissal is found 
to be unfair (such as compensation and reinstatement).

Additional  costs  for  collective  dismissals:  most  countries  impose  additional  delays,  costs  or  notification 
procedures when an employer dismisses a large number of workers at one time. This measure includes only 
additional  costs  which  go  beyond  those  applicable  for  individual  dismissal.  It  does  not  reflect  the  overall 
strictness of regulation of collective dismissals, which is the sum of costs for individual dismissals and any 
additional cost of collective dismissals.

Regulation of temporary contracts: quantifies regulation of fixed-term and temporary work agency contracts 
with respect to the types of work for which these contracts are allowed and their duration. This measure also 
includes regulation governing the establishment and operation of temporary work agencies and requirements 
for agency workers to receive the same pay and/or conditions as equivalent workers in the user firm, which 
can increase the cost of using temporary agency workers relative to hiring workers on permanent contracts.

For each of these indicators a score from 0 (least restrictions) to 6 (most restrictions) is given. Sub-indicators 
are  aggregated  into  upper-tier  indicators  by  means  of  simple  averaging.  The  overall  EPL  indicator  is  the 
simple average of the EPL indicator for individual dismissals on regular and fixed term contracts.

legislation  poses  constraints  on  the  use  of  such 
contracts  with a view to prevent discrimination of 
fixed-term  workers and a possible abuse of  fixed-
term  contracts.  Requirements  generally  consist  of 
pre-defined  cases  justifying  the  use  of  fixed-term 
contracts and limits on the number of renewals or 
total  duration  of  cumulated  contracts.  Among  the 
reasons that are often  mentioned in the legislation 
justifying  the  use  of  fixed-term  contracts,  the 
following  are  among  the  most  recurrent:  coping 
with unexpected fluctuations of demand; replacing 
permanent staff on holiday, maternity leave or sick 
leave;  hiring  workers  with  specialised  skills  to 
carry  out  specific  projects;  start-up  ventures 
implying risky and uncertain returns.

Different  contract  typologies  may  define  different 
conditions  for  the  use  of  temporary  labour.  As 
opposed  to  permanent  contracts  that  are  generally 
subject  to  a  rather  homogenous  discipline  within 
each  country,  different  typologies  of  temporary 
labour  are  often  present,  with  a  view  to  modulate 
conditions  for  the  use  of  fixed-term  labour  to  the 
specific  reasons  underlying  the  choice  of  fixed-
term  contracts.  For  instance,  in  the  case  of  very 
short  labour  relations  often  related  to  the  need  of 
replacing  permanent  workers  that  are  temporarily 

absent,  interim  work  is  often  chosen  in  light  of 
relatively low procedural costs.

2.3. 

EPL REGIMES IN EU COUNTRIES 

2.3.1. Quantitative EPL indicators

a 

permit 

indicators 

the  basis  of 

Synthetic 
prima-facie 
quantification  of  the  strictness  of  EPL  legislation. 
The OECD compiles regularly such indicators  for 
the 
most  OECD  countries  on 
codification  of  21  elements  of  the  legislation, 
covering  all  three  main  aspects  of  employment 
protection:  protection  of  permanent  workers 
regulation  on 
against 
temporary 
specific 
additional  requirements  for  collective  dismissals 
(see  Box  II.2.1 for 
the 
indicators). 

individual  dismissal; 

the  construction  of 

employment; 

forms  of 

Graph  II.2.1 provides  a  synthetic  overview  of  the 
evolution of EPL stringency in EU countries. The 
latest available indicators computed by the OECD 
are for 2008 (data for 2009 are available for France 
and  Portugal).  The  Graph  shows  that  since  1998 
the EPL legislation for individual regular contracts 

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Labour Market Developments in Europe, 2012

Graph II.2.1: Evolution of OECD EPL indicators in EU countries

Source: OECD.

have 

changed 

contracts

and  collective  dismissals  is  broadly  stable  over
time in most EU countries, while the regulation of
quite
fixed-term 
considerably  in  a  number  of  countries.  EPL  for
fixed-term  contracts  became  less  rigid  notably  in
Southern  countries  (Greece,  Italy,  Portugal),  but
the  Netherlands,  Slovakia. 
also 
Conversely,  EPL  for  fixed-term  contracts  become 
more  stringent  in  some  New  Member  States
(Czech  Republic,  Hungary,  Poland),  albeit
from  a  situation  of high
generally  starting 
flexibility.

in Germany, 

Cross-country illustration of the main EPL features
is  provided  in  Graphs II.A2.1 and II.A2.2 and  in 
Table II.A2.1  in  the Appendix.  (28)    In  the  radar 
charts  the  EPL main  sub indicators  (EPL for
regular  contracts,  EPL for  temporary  contracts,
additional  requirements for  collective  dismissals)
and  the  sub  indicators  for  the  EPL  for  regular
contracts for  each  country  are  put  in  comparison 

(28) The  taxonomy,  proposed  by  the  European Commission 
(2007),  is based  on  principal  component  analysis  and
largely  confirms  the  findings  of  existing  seminal  work  on
the 
(Esping-
Andersen, 1990).

socio-economic  systems 

taxonomy  of

Table II.2.1:

EPL reforms for permanent and fixed term contracts 2008-2010, an overview

BG

CZ

EE

EL

ES

FI

FR

HU

IE

IT

LT

LV

NL

PT

UK

Country
Permanent contracts - Restrictions to individual
dismissals
Permanent contracts - Notice and severance 
payments

AT
2008; 
2009

2008

2008

2010

2010

Permanent contracts - Procedural  requirements

2010 2008 2008

2009

2008

2010

2010

2008 2009

2010

2008

2008

2008

2008; 
2009

2009

2009

2009

2010

2009 2008

2009

2010
2010 2009

2008 2010 2010

2008

2010

2009

2010 2010 2008
2008 2010 2010 2008

2009 2010
2009

Permanent contracts - Probation period
Permanent contracts - Collective dismissals
Permanent contracts - Other
Temporary contracts - Max number of  renewals
Temporary contracts - Max duration
Temporary contracts - Temporary agency work
Temporary contracts - Other

Source: DG ECFIN LABREF database.

84

Part II

Thematic chapters

up  to  4  years  and  20  years),  definition  of unfair
their  consequences  (pecuniary
dismissals  and 
compensation  and 
larger
perimeter  of  the  radar  chart  suggests  a  more  rigid
regulation  of  individual  dismissals.  The  main
points can be summarised as follows:

reinstatement).  A 

strictly 

regulated 

• Broad EPL elements. Individual dismissals are
relatively 
in  Southern
countries,  notably for  permanent  contracts.
Nordic  countries  and  Continental  countries
have  on  average  the  tightest  regulation  of
temporary work. Anglo-Saxon Countries are in 
general  characterised  by flexible  employment
protection  legislation. Country  groupings are
relatively  homogenous,  although  with  some
exceptions  (e.g, high  regulation  for  collective
dismissals wither respect to Southern Countries
in Italy, relatively low regulation of fixed-term 
contracts in Slovakia as compared with Eastern
Countries,…).

with  the  EU  average  and with  the  average  of
country groups defined on the basis of similarities
in
(Nordic  Countries,
Continental Countries, Southern Countries, Eastern
European Countries).

flexicurity models 

The latest available information for all countries is
for  2008.  Since  then,  a  number  of  countries have
carried  out  reforms,  in some  cases  relevant  (see
Box II.2.1) which are not taken into account in the
value  of  the  EPL  indexes for  2008.  Table  II.2.1
presents  and  overview of  EPL  reforms  in  EU
countries implemented in the 2008-2010 period on
the  basis  of  the  ECFIN  LABREF  database.  Table
II.2.2 presents  correlation analysis  across  the 
various indicators. It is shown that the various EPL
dimensions tend to be positively correlated, so that
the  countries with  a  higher  degree  of strictness  of
EPL in one aspect tend also to be more restrictive
in other aspects.

Table II.2.2: Correlation among OECD EPL sub-indices

EPL sub-indexes

EPL on temporary
contracts

EPL on collective 
dismissal

•

EPL on regular
contracts

EPL on regular
contracts
1
0.407
-0.0308

1
1
0.0789
Sub-indexes for EPL on regular contracts

Procedural
inconvenience of
dismissal
1
0.3337
0.5895

Procedural
inconvenience 
of dismissal

Notice and 
severance pay

Difficulty of
dismissal

1
0.4156

1

(1) Sub-indices for regular contracts: Procedural
inconvenience of dismissal – procedural inconveniences
(unweighted average of notification procedures and delay
involved before notice can start). Notice and severance 
pay- Length of notice period and severance pay at 9
months, 4 years and 20 years of tenure (unweighted 
average). Difficulty of dismissal – consequences of unfair
dismissal (unweighted average of definition of justified 
dismissal, lenth of trial period, compensation following unfair
dismissal, possibility of reinstatement following unfair
dismissal, deadline to make a claim of unfair dismissal).
Source: Elaboration on OECD data.

regular  employment, 

Graphs II.A2.1 and II.A2.2 permit a comparison of
the main EPL elements across EU countries for the
latest  available  value  of  the  indicators.  The  radar
charts in Graph II.A2.1 provide information about
the
the  protection for 
restrictions for  the  use  of  temporary  employment,
the  additional  requirements  to  be  respected  if
dismissal  is  collective.  Graph II.A2.1 summarise
inconvenience
information 
employers  encounter if  they  intend  to  dismiss  a
worker  (notification  and  notice  period), 
trial
period, notice and severance payments (for tenures

procedural 

on 

expensive 

in  Southern 

Individual  dismissals,  permanent  contracts. 
Individual  dismissals  tend  to  be  considerably
countries,
more 
including on account of a short trial period. The
definition  of unfair  dismissals  is  relatively
strict  in  Continental  and  Northern  countries,
while  the  opposite  holds  for  Central  and 
Eastern countries. Anglo-Saxon countries have
in  all  aspects  the most  flexible  regulation  of
individual  dismissals. Country 
regulations
appear highly heterogenous also within country 
groupings.

2.3.2. Main  features  of  EPL  regulations  across 

EU countries (29)

is 

Where  EPL  differs most
the  regime  for
individual  dismissals  on  regular  contracts.  Tables
II.A2.1-II.A2.4  summarise information  on  the
for
main  characteristics  of  EPL 
individual  dismissals.  The  source  is  OECD;  the
latest available information for all countries is for
2008 
taken  place
afterwards are not contemplated). The EPL regime

reforms having 

legislation 

that 

(so 

(29) Information  in  this  section  is  mostly  based  on  OECD
http://www.oecd.org/document/11/0,3746,en_2649_33927
_42695243_1_1_1_1,00.html or  ILO http://www.ilo.org
/dyn/eplex/termmain.home?p_lang=en. Further information
can  be  found  at  the  website  of  the  European  Labour  Law
Network: http://www.labourlawnetwork.eu/home/prm/52/
size__1/index.html.

85

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Labour Market Developments in Europe, 2012

differs quite considerably not only in terms of the 
degree  of  stringency  but  also  in  terms  of  the 
instruments  used 
to  protect  workers  against 
dismissal. A number of points stand out as follows:

•

Individual  notice  and  dismissal.  Normally, 
procedures  depend  on  whether  the  reason  for 
dismissal  is  personal  (e.g.  due  to  worker's 
incapacity,  disciplinary  reasons)  or  economic. 
Procedures may also depend on the typology of 
worker,  company  size,  and 
trade  union 
membership.  In  general,  if  dismissal  is  based 
on  personal  reasons  procedures  tend  to  be 
lighter.  In  some  countries  employers  have  to 
notify, sometimes on request by employee, one 
third  parties  (normally  workers' 
or  more 
the  public  employment 
representatives  or 
other 
inspectorate 
service, 
government  authorities) 
to 
if 
dismiss  an  employee.  Apart  from  notification, 
in  some  countries  employers  also  have  to 
provide  third  parties  with  a  justification  of 
dismissals.  Depending  on  the  country,  delays 
before notice can start may exceed one month. 

or 
intend 

labour 

they 

• Definition  of  fair  and  unfair  dismissals.  In 
some  countries  the  definition  of  fair  dismissal 
is  not  highly  restrictive  and  unfair  dismissals 
are  limited  to  cases  which  are  not  reasonably 
based on economic circumstances and on cases 
of  discrimination 
(e.g.,  Belgium,  Czech 
Republic, Denmark, Greece,  Hungary, Ireland, 
Italy,  Poland,  Slovakia, United  Kingdom).  In 
some  countries  dismissals  are  not  justified  if 
they are not based on an effective and relevant 
reason  (e.g.  Finland,  France).  In  addition,  in 
case  of  redundancy,  dismissals  are  considered 
as  unfair  if  the  employer  fails  to  take  into 
account  specific  circumstances  of  dismissed 
workers such as social dimension (e.g., France, 
Germany,  Austria), 
(e.g.,  Estonia, 
Sweden),  family  responsibilities  (e.g.,  France, 
Estonia),  professional  qualifications 
(e.g., 
Estonia,  France),  age/gender  balance  in  a  firm 
(the  Netherlands)  etc.  In  some  countries  fair 
to 
dismissal 
considered.  These 
redundancy 
alternatives 
retraining, 
rehabilitation  and/or  a  transfer  of  a  worker  to 
another  position  in  a  firm  (e.g.,  Austria, 
Finland,  Estonia,  France,  Germany,  Sweden, 
the Netherlands). 

requires  specific  alternatives 

to 
may 

include 

tenure 

be 

86

• Trial  period,  notice  period  and  severance  pay. 
Monetary  costs  related  to  dismissal  depend  on 
both the lengths of notice period and severance 
payments. In some countries employers do not 
bear  any  severance  payments,  however,  notice 
period  can  be  very 
long  (e.g.,  Finland, 
Sweden). (30)  In  others,  severance  pay  is  the 
the 
main  cost  of  dismissal  (e.g.  Spain, 
Netherlands). Notice period and severance pay 
generally  do  not  apply  during  the  trial  period. 
The  maximum  trial  period  in  the  EU  spans 
from  less  than  1  month  to  12  months;  in  a 
majority  of  countries  it  is  between  3  and  6 
months.  As  for  the  financing  of  severance 
payments,  it  generally  comes  fully  from  the 
employer  that  operated  the  dismissal,  but  in 
some countries severance payments are  shared 
among  several  employers.  In  Austria  for 
instance, severance payments are financed via a 
fund  at  the  name  of  the  employee,  which  is 
portable  across  employers  until  it  is  used 
(dismissal  or  retirement)  and 
to  which  all 
employers  in  the  career  history  of  the  employee 
contribute. 

• Compensation and reinstatement if dismissal is 
unfair.  In  case  of  unfair  dismissal,  firms  have 
additional  obligations  against  an  employee. 
Normally,  a  worker  is  entitled  either  to  a 
pecuniary  compensation  on  top  of  what  is 
normally  required  for  fair  dismissals  or  to  be 
reinstated, and employers may also have to pay 
the worker's foregone wages ("back pay"). The 
regime  for  reinstatement  differs  widely  across 
EU  countries.  In  some  cases  reinstatement  is 
not  foreseen  (e.g.,  Belgium,  Finland)  while  in 
others  reinstatement  is  the  rule  (e.g.,  Austria, 
Estonia, Luxembourg, Czech Republic). Often, 
the  decision  about  reinstatement  is  left  to  the 
worker. In some cases, firms may have to bear 
additional  compensation  in  the  absence  of 
(e.g.,  Luxembourg,  United 
reinstatement 
Kingdom,  Slovakia).  In  some  countries,  firms 
have  to  both  reinstate  a  worker  and  provide 
"back  pay"  (e.g.,  Italy,  Portugal).  In  some 
countries,  instead  of  additional  compensation 
only  "back  pay"  is  required  (e.g.,  Czech 
Republic,  Greece,  Ireland).  "Back  pay"  is 

(30) With 

few  exceptions 

(Germany,  Belgium,  Greece), 
statutory  severance  payments  are  due  without  any 
consideration of the notice period.

Part II

Thematic chapters

Box II.2.2: EU directives on collective dismissals and on fixed-term labour

Collective dismissals

The Directive on collective redundancies (98/59/EC) provides that an employer which envisages collective 
redundancies  must  provide  workers’  representatives  with  specified  information  concerning  the  proposed 
redundancies and must consult with the  workers’ representatives in good time  with a view to reaching an 
agreement.  These  consultations  should  cover  ways  of  avoiding  or  of  reducing  the  redundancies,  and  of 
mitigating their consequences by recourse to social accompanying measures aimed, in particular, at aid for 
redeployment and retraining of the redundant workers. The Directive also provides for the public authorities 
to  be  notified  of  any  projected  collective  redundancies,  and  requires  that  these  redundancies  cannot  take 
effect earlier than 30 days after this notification.

Fixed-term labour

The EU Council Directive 1999/70/EC is based on the framework agreement on fixed-term work concluded 
by the EU representation of social partners (ETUC, UNICE, CEEP) and sets EU-wide principles to prevent 
the discrimination of fixed term workers and the abuse of  fixed-term contracts. 

According  to  the  principle of  non-discrimination,  treating  fixed-term  workers  in  a  less  favourable  manner 
than permanent workers solely because they have a fixed-term contract is forbidden, unless the difference in 
treatment can be justified on objective grounds.

To prevent abuse arising from the use of successive fixed-term employment contracts, the legislation on the 
individual labour contract of definite duration must have one or more of the following measures:

•

•

•

objective reasons justifying the renewal of such contracts or relationships; 

the maximum total duration of successive fixed-term employment contracts and relationships; 

the number of renewals. 

In  general,  Member  States  can  choose  to  introduce  either  objective  reasons  to  justify  renewals,  or  a 
maximum  total  duration  or  a  maximum  number  of  renewals  of  the  fixed-term  employment  contract  or 
relationship.

The  Directive  on  temporary  agency  work  (2008/104/EC)  aims  to  guarantee  an  effective  protection  to 
temporary workers while contributing to the development of the temporary work sector as a flexible option 
for  employers.  To  be  implemented  by  December  2011,  it  lays  down  the  principle  of  non-discrimination, 
regarding  the  essential  conditions  of  work  and  of  employment,  between  temporary  workers  and  workers 
who are recruited by the user company.

Details  on  directives  and  their  implementation  are  to  be  found  at  http://ec.europa.eu/social/main.jsp?catId
=157&langId=en.

capped 
Republic, Portugal, Ireland).

some  countries 

in 

(e.g.,  Czech 

EU  countries  exhibit  a  somewhat  lower  variation 
in  terms  of  the  legislation  to  deal  with  collective 
dismissals.  In  spite  of  differences,  a  series  of 
common  elements  are  found,  which  are  inter-alia 
linked to the presence common EU principles to be 
followed  in  case  of  collective  enshrined  in  EU 
Council Directives 75/129 and 98/59/EC.

• Definition  of  collective  dismissal.  National 
laws generally refer to the minimum number of 
workers  dismissed  in  a  given  period  of  time, 
most often linked to firm/plant size. 

• Notification and consultation procedures. In all 
EU countries, employers are required to inform 
and consult with workers' representatives when 
contemplating 
dismissals. 
Consultation  most  often  concerns  alternatives 

collective 

87

European Commission

Labour Market Developments in Europe, 2012

to  redundancy  and  ways  to  mitigate  its  effect. 
In  a  majority  of  countries,  the  employer  has 
also the obligation to draw up a social plan that 
to 
may  comprise  both  passive  (subsidies 
alleviate the hardship following dismissal) and 
active  labour  market  policies  (re-training,…). 
All EU countries also provide for the obligation 
of  employers  to  notify  the  intention  to  operate 
collective  dismissals 
to  competent  public 
authorities. 

• Dismissal 

and 

require 

selection 

countries  have 

re-employment 
the 
criteria.  EU  Directives 
that 
employers  notify  workers  representatives  the 
criteria followed for selecting employees to be 
dismissed.  Various 
also 
introduced mandatory criteria to be followed as 
a protective measure for workers (e.g., Estonia, 
Germany).  In  some  countries,  rules  must  be 
followed  for  the  reinstatement  of  collectively 
dismissed  workers  when employers begin  new 
hiring  (e.g.,  Cyprus,  Finland,  Luxembourg, 
Slovakia,  Slovenia).  In  some  countries  legally 
binding selection criteria for dismissals coexist 
with  priority  rules  for  re-employment (e.g., 
France, 
the  Netherlands, 
Italy,  Lithuania, 
Romania, Spain, Sweden). 

• Monetary  costs.  In  most  cases,  the  same 
severance  payments  provided  for  individual 
economic  dismissal  are  also  due  in  case  of 
collective  dismissal. 
some  countries, 
additional  monetary  compensations  have  to  be 
provided  by  the  employers  (e.g.,  Belgium, 
Italy,  Poland).  In  other  countries,  specific 
provisions are contained in the social plan (e.g., 
Austria, 
the 
Netherlands).

Luxembourg, 

Germany, 

In 

• The  regulation  of  fixed  term  employment 
differs  quite  considerably  across  the  EU,  in 
spite of the presence of common EU principles. 
the  EU  Council  Directive 
Following 
1990/70/EC  on  fixed 
the 
legislation  generally  discipline  at  least  one  of 
(i) 
three  aspects  of 
reasons  justifying  their  use;  (ii)  maximum 
number  of  renewals  (i.e.  contracts  with  the 
same 
(iii)  maximum  duration  of 
successive fixed-term contracts. The legislation 
in  Member  States  differs  as  to  the  way  it 

temporary  contracts:

term  contracts, 

firm); 

88

regulates  different  combinations  of
elements.

these 

• Reasons  justifying  fixed-term  employment.  In 
some  countries  there  is  no  requirement  to  use 
fixed-term  contracts  only  in  pre-defined  valid 
cases  (e.g.  Germany,  the  Netherlands,  United 
Kingdom,…), while others define only broadly 
the context for their use (e.g. Austria, Belgium, 
Italy,…).  In  some  countries  the  legislation  list 
instead  specific  reasons  for  hiring  with  fixed-
term 
France, 
(e.g. 
Romania,…).  In  some  countries,  limits  on 
renewal and the maximum cumulated period of 
fixed-term contracts depend on whether the use 
falls or not within pre-specified cases.

contracts 

Finland, 

• Renewal  of 

fixed-term 

contracts.  Some 
countries  define  a  maximum  number  of 
renewals  of  fixed  term  contracts  (generally 
between  2  and  4),  while  in  others  there  is  no 
upper  bound  on  how  many  time  the  same 
worker can be offered a fixed-term contract. In 
those  case,  subsequent  renewals  generally 
imply  a  conversion  to  a  permanent  contract 
except  in  case  of  objective  reasons  (e.g., 
Austria, Denmark, Hungary, Ireland).

• Maximum  cumulated  number  of  fixed-term 
contracts.  The  cap  on  cumulated  maximum 
duration  may  either  absent  or  very  long  (e.g. 
Austria, Poland, Estonia) or rather short instead 
(between  two  and  three  years,  e.g.,  France, 
Luxembourg, Spain).

2.4. 

EPL AND ECONOMIC OUTCOMES 

2.4.1. Labour market impact

EPL  generally  comprises  both  a  "transfer"  (e.g., 
severance  payments  from  the  employer  to  the 
employee)  and  a  "deadweight  loss"  component 
(notably, procedural costs, long dispute settlement 
processes).  While  the  deadweight  loss  component 
inevitably  raises  effective  labour  costs,  thereby 
weighing  not only on dismissal decisions but also 
on  hiring,  the  transfer  component  of  EPL  may 
have  neutral  effects,  but  only  under  restrictive 
are 
conditions, 
the 
sufficiently 

provided  wages 
for 

namely, 
flexible 

to  compensate 

insurance provided with firing restrictions (Bertola 
and Rogerson, 1997; Elmeskov et al., 1998).

Strict employment protection goes especially to the 
detriment  of  the  adjustment  capacity  of  labour 
markets and may involve social costs. EPL reduces 
the  likelihood  that  jobs  are  destroyed  in  the 
presence  of  shocks,  but,  by  raising  the  effective 
cost of employment, it also dampens job creation. 
While  the  predicted  effect  on  the  unemployment 
rate  of  strict  EPL 
job 
destruction  coupled  with  reduced  creation  are 
likely to translate into longer unemployment spells 
or 
labour  market  segmentation, 
resulting  from  a  high  share  of  fixed-term  job 
offers.

is  ambiguous, 

into  higher 

lower 

Job market flows

Economic  theory  demonstrates  that  employment 
protection  reduces  both  job  separations  but  also 
hiring.  It  has  been  shown  by  means  of  imperfect 
matching labour market models that, by increasing 
the  firing  costs  borne  by  firms,  EPL  also  reduces 
the  present  value  of  a  filled  job  for  the  employer, 
thereby leading to lower job creation (Mortensen and 
Pissarides, 1994; Bertola, 1999; Garibaldi, 1998). 

A  number  of  existing  empirical  studies  find 
evidence  of  a  negative  cross-country  relationship 
between  employment  protection  and  flows  in  and 
out  of  unemployment.  Among  others,  Garibaldi, 
Konings and Pissarides (1997) present data on job 
reallocation rates for 10 OECD countries, finding a 
negative  correlation  between  job  reallocation  and 
employment protection. Gomez-Salvador, Messina 
and  Vallanti  (2004)  find  that  EPL  has  a  negative 
effect  on  the  dynamics  of  job  reallocation.  Table 
II.A2.5  provides  a  summary  of  the  results  of 
selected empirical studies.

New empirical work supports existing findings and 
helps qualifying them:

Table 
II.2.2 displays  correlation  coefficients 
between  indices  of  job  market  flows  and  OECD 
EPL  indexes.  Data  on  job  market  flows  were 
constructed according to the methodology detailed 
in  Arpaia  and  Curci  (2009).  The  job  finding  rate 
to  be  negatively  correlated  with  all 
appears 
indicators  of  EPL  considered,  and  the  relation  is 
particularly strong for EPL for regular employment 
(notably  with  the  sub-indicator  encompassing  the 

Part II

Thematic chapters

severance 

pay 
for  collective 

of 

strictness 
requirements)  and 
dismissals. 

notice 

and 

for  EPL 

Graph II.2.2: Job finding rate and strictness of overall 

employment protection legislation, 2003-2007

Source: Elaboration on OECD and LFS data

Graph II.2.2 provides a visual representation of the 
cross-section  relation  between  the  overall  EPL 
index and the job finding rate. The job separation 
rate  is  also  negatively  related  with  these  two 
components of EPL, but exhibits a positive relation 
with the EPL indicator for fixed-term contracts.

Graph II.2.3: Share of temporary workers in total 

unemployment and strictness of overall 
employment protection legislation, 2003-2007

Source: OECD and EUROSTAT (LFS).

the 

the 

reports 

Cross-country  regression  analysis  controlling  for 
time effects broadly confirm these findings. Table 
results.  Four  different 
II.2.3
specifications  of 
regression  model  are 
considered,  using  alternative  the  overall  EPL 
regular 
indicator, 
fixed-term 
employment,  collective  dismissals, 
contracts,  and  three  sub-indictors  for  EPL  for 
regular  employment.  As 
the 
correlations,  the  job  finding  rate  has  a  stronger 

suggested  by 

sub-indicators 

the 

for 

89

European Commission

Labour Market Developments in Europe, 2012

Table II.2.3: Correlation coefficients between EPL indicators and measures of labour market performance, 18 EU Member

States, 1999-2007

(1)

(2)

Overall 
EPL

EPL on regular
contracts

(3)
EPL on 
temporary
contracts

(4)
EPL on 
collective 
dismissal

(5)
Procedural 
inconvenience of
dismissal

Correlation of average values across countries

(6)

(7)

Notice and 
severance pay

Difficulty of 
dismissal

Job finding rate
Job separation rate
Overall unemployment
Youth unemployment
Long-term unemployment
Share of temporary workers

Job finding rate
Job separation rate
Overall unemployment
Youth unemployment
Long-term unemployment
Share of temporary workers

-0.1861
0.083
0.1105
0.2041
0.1774
0.6136***

-0.1849**
0.0527
0.1096
0.1964**
0.1358*
0.5868***

-0.2362
-0.1146
0.0064
-0.0418
0.2251
0.4178*

 -0.2280***
-0.0882
0.0085
-0.037
0.1273
0.3929***

-0.0902
0.1886
0.1442
0.3012
0.0934
0.5402**

-0.2693
-0.1473
0.311
0.3316
0.4211
-0.0477

-0.0873
0.0196
-0.0479
-0.1548
0.078
0.3951

Correlation across the whole panel

-0.0947
0.1306
0.1392*
0.2825***
0.0967
0.5168***

-0.2463***
-0.1009
0.3009***
0.3192***
0.3190***
-0.0633

-0.0538
0.0656
-0.0446
-0.1448*
-0.0192
0.3744***

-0.3133
-0.1901
0.1371
0.1219
0.2158
0.3371

-0.2852***
-0.1605*
0.1246
0.1078
0.2077***
0.3174***

-0.1449
-0.0937
-0.0891
-0.0813
0.2367
0.2466

-0.1838**
-0.0984
-0.0745
-0.0655
0.0951
0.2238***

(1) Sub-indices for regular contracts: Procedural inconvenience of dismissal procedural inconveniences (unweighted
average of notification procedures and delay involved before notice can start). Notice and severance pay- Length of
notice period and severance pay at 9 months, 4 years and 20 years of tenure (unweighted average). Difficulty of dismissal
consequences of unfair dismissal (unweighted average of definition of justified dismissal, lenth of trial period, compensation 
following unfair dismissal, possibility of reinstatement following unfair dismissal, deadline to make a claim of unfair dismissal).
Source:

relation with EPL than the job separation rate and
EPL  for  regular  employment  and  collective 
dismissal  exhibits  a  significant  negative  relation
with both job finding and job separation rates. The
significance  of  the  EPL  indicator  for  regular
contracts on both labour market flows appear to be
associated  especially with the  impact  of
long
notice  periods  and high  severance  payments,
followed  by  the  sub-indicator  on  difficulty  of
dismissal  (taking  into  account  trial  period,
the
definition  of fair  dismissal,  the implications  of
unfair dismissals, possibilities of reinstatement).

Overall, the analysis of the data shows that higher
EPL,  notably for  regular  contracts  and  collective
dismissals,  appears to  be  robustly  associated  with 
lower  job  finding  rates,  less  strongly with  job
destruction rates. The results also suggest that the 
aspects  of  EPL  regulating notice  and  severance
pay, appear to be the strongly linked to job finding 
rates.

Unemployment rates

Existing  evidence  concerning  the  link  between
employment  protection  legislation  and  the  overall
unemployment  rate  is not clear-cut.  Economic
theory  predicts  that  strict  employment  protection
into
regulations 
unemployment, with ambiguous effects on overall
unemployment. A majority of the empirical studies
(such  as  Bertola,  1990;  OECD,  1999;  Blanchard 

flows  out  of  and 

reduce

90

and Portugal, 2001), do not find significant effects
of EPL on unemployment. However, other studies,
such  as Lazear  (1990),  estimate  a  positive  impact
overall
of 
unemployment.

employment 

protection 

on 

Correlation  and  regression  analysis  presented  in
the Tables II.2.3 and II.2.4 broadly  confirm  the
result  that  EPL is not significantly  related with
overall  unemployment.  Correlation  and  regression
coefficients are non-significant, with the exception
of  the  indicator  of  collective  dismissal, which
appears to be positively and significantly linked to
overall  unemployment.  An  explanation  for  this
result  is  not straightforward,  and  requires  further 
analysis aimed  at  disentangling 
the  possible
influence  of  omitted variables  in  explaining  the
cross-country variation in unemployment rates, an
exercise which is beyond the scope of this note.

Employment  protection  legislation however  does
affect  the  duration  and the  age  composition  of
unemployment.  Since  job  finding  rates  are  lower
with stricter  EPL,  also  the  average  length  of
unemployment  spells  tend  to  become  longer.  The
implication is that with strict EPL there is a higher
risk  of  long-term  unemployment  (see  e.g.  OECD,
2004) and a higher risk of unemployment for those
that  enter  the  labour market  for  the  first  time,
namely  the  young.  The  correlation  and  regression
analysis  confirm  the  expectation  for  long-term
unemployment, which  appear  to  be positively

Part II

Thematic chapters

Table II.2.4:

EPL and labour market performance 18 EU countries, 1999-2007

Dependent variables

Explanatory variables

Job finding rate

Job separation rate

Overall unemployment

Youth unemployment

Long-term
unemployment ratio

Share of temporary
workers

Overall EPL

R-squared

EPL on regular contracts

EPL on temporary contracts

EPL on collective dismissal

R-squared

Procedural inconvenience of
dismissal

Notice and severance pay

Difficulty of dismissal

R-squared

-0.013**

[0.006]

0.068

-0.023***

[0.006]

0.002

[0.003]

-0.024***

[0.006]

0.186

0.007

[0.006]

-0.013***

[0.004]

-0.009

[0.008]

0.126

0.0003

[0.0004]

0.008

-0.001**

[0.0004]

0.0007**

[.0003]

-0.0009*

[0.0005]

0.067

0.001**

[0.0004]

-0.0006*

[0.0003]

-.0009*

[.0005]

0.065

Overall of EPL

0.563

[0.364]

0.031

   2.322***

[0.798]

0.054

Overall EPL  sub-indicators

0.278

[0.316]

0.373

[.24475]

1.606***

[0.410]

0.126

-0.381

[0.681]

2.12***

[0.523]

3.537***

[0.829]

0.189

EPL sub-indicators for regular employment

-0.025

[0.625]

0.674**

[0.257]

-0.589

[0.615]

0.052

-1.749

[1.348]

1.373**

[0.552]

-0.07

[1.473]

0.059

2.550**

[1.246]

0.032

4.144***

[1.317]

0.27

[0.963]

7.246***

[1.315]

0.163

-2.288

[1.716]

2.861**

[1.158]

1.795

[2.013]

0.07

0.045***

    [0.005]

0.364

0.022***

    [0.003]

0.023***

[0.005]

-0.001

[0.004]

0.365

0.023***

[0.005]

0.014***

[0.004]

-0.005

[0.006]

0.209

(1) Estimation method: cross-section regression including year effects. Robust standard errors in brackets. * Statistically
significant at 10% level ** Statistically significant at 5% level *** Statistically significant at 10% level. Sub-indices for regular 
contracts: Procedural inconvenience of dismissal – procedural inconveniences (unweighted average of notification
procedures and delay involved before notice can start). Notice and severance pay- Length of notice period and severance 
pay at 9 months, 4 years and 20 years of tenure (unweighted average). Difficulty of dismissal – consequences of unfair
dismissal (unweighted average of definition of justified dismissal, lenth of trial period, compensation following unfair dismissal,
possibility of reinstatement following unfair dismissal, deadline to make a claim of unfair dismissal).
Source:

the 

contracts 

(especially 

linked  with most  EPL indicator,  notably  EPL for
regular 
sub-index 
summarising  notice  and  severance  payments)  and
collective  dismissals.  The  youth  unemployment
rate  appears 
linked
especially with  EPL  for  fixed-term contracts,  a
result that could be interpreted in light of the fact
that the young are more likely to be hired on fixed
term contracts than the old.

to  be  positively 

instead 

Labour market segmentation

is 

likely 

Flexibility 
to hire  with  fixed-term  contracts
coupled  with  persistently  high  EPL for  regular 
contracts may  lead to  increased  segmentation  of
the  labour market. As  shown  previously,  reforms
reducing  the  stringency  of  EPL  since  the  nineties
mainly  concerned  fixed-term  contracts.  This  type
of  reforms 
to  entail “honeymoon”
(transitory  job  creation)  effects  and  a  decline  in
productivity  (see  Boeri  and  Garibaldi,  2007). The
persistence  of  high  EPL  on  regular  contracts,
however, may lead  to  a  situation where  job
creation takes place mostly by means of temporary
jobs.  More  importantly,  the  risk  arises  that  the
workers  that  are  initially hired with temporary
contracts cannot easily move into permanent jobs, 
i.e.,  that  the  labour market becomes  segmented, 
having  well-protected
with 

some  workers 

permanent jobs, and some workers being relegated
to  precarious  employment.  Furthermore,  the high
incidence 
contracts makes
employment  more  volatile and  prone  to  large
fluctuations  over 
the  economic  cycle,  with
employment variations concentrated.

short-term 

of 

the 

incidence  of 

EPL  for  permanent  contracts  is  correlated  across
countries with 
temporary 
employment. As shown in Boeri (2011), there is a
positive  cross-section  correlation  between 
the
share  of  temporary  contracts in  total  employment 
and the strictness of EPL for permanent contracts.
This evidence is confirmed in Graph II.2.3 and in 
Tables II.2.3 and II.2.4.  Note  that  the  relation 
between  the  share  of  temporary  contracts  and
fixed-term  employment  is  also  positive, which  is
opposite of what one may expect. The result could 
be spurious, and mostly explained by the fact that
EPL  for  regular  and  fixed-term  contracts  are 
correlated  across  countries  (see  Table  II.2.2,  so
that  the  countries with  higher  EPL  for  fixed
contracts have more fixed-term employed because
permanent contracts are hardly offered due to high
EPL for regular jobs). 

91

European Commission

Labour Market Developments in Europe, 2012

Table II.2.5:

Share of temporary contracts and EPL reforms 
18 EU countries, 1983-2008

Dependent variable

Explanatory variables
Log share of temporary contracts on 
total employment

Lagged change in EPL index for
temporary contracts

Constant

Observations
Number of countries
R-squared

Change in share of temporary contracts
on total employment
-0.127*
[0.0509]
-0.00285+
[0.00162]
0.0120*
[0.00481]
342
18
0.175

(1) ** p<0.01, * p<0.05, + p<0.1; specifications include
country and year effects. Estimation method: Least Square 
Dummy Variables, standard errors robust with respect to
heteroschedasticity and within country autocorrelation.
Source: OECD and EUROSTAT (LFS).

is 

interpretation 

labour.  This 

There is evidence that reductions in EPL for fixed-
term  is  associated with  a  more  widespread  use  of
fixed-term 
is
corroborated by the econometric evidence reported
in  Table II.2.5. The  table  reports  results  from  a
regressions  putting  in  relation  the  change  in  the
share of temporary contracts on total employment
to  EPL 
contracts
for 
(corresponding  to  a  negative  change  in  the  EPL
index),  taking  into  account  country  and  time
factors  by means  of fixed  effects  and  the  starting
level  of  the  incidence  of  temporary  contracts.  It
turns  out 
the
restrictiveness  of  EPL,  the share  of  temporary
contracts  in  the  total  economy was  reduced
significantly on average across the sample.

that  after 

temporary 

reducing 

reforms 

reforms

2.4.2.

Impact  on  productivity  growth and
adjustment

can 

through  which  EPL 

The economic literature has identified a number of
channels 
affect
productivity and, indirectly, economic growth. On
the one hand, job security can foster human capital
investments in firm-specific knowledge (e.g., Belot
et  al.,  2007). This  incentives  to firm-specific
human  capital  investments  are  likely to  raise
productivity.  On  the  other  hand,  a  series  of
channels  suggest  an  opposite,  negative  effect  of
stringent EPL on productivity.

• First,  EPL may  deter  firms’  restructuring  and
the  reallocation  of  labour,  both  voluntary  and 
involuntary,  towards  fastest growing  activities
and 
overall
productivity  in  level  and growth  rates  (e.g.,
Hopenhayn and Rogerson, 1993).

reducing 

sectors, 

thereby 

92

• Second,  high  EPL may  discourage firms’
investments  in  innovative  activities.  Since  this
type of activities are risky, and since high EPL
tend  to  shift  lay-off  risks  onto  the  employers,
high  EPL  could  deter  productivity  growth  due
to  a  depressed  innovative  performance  (e.g.,
Saint Paul, 2002).

• Third,  overly high  EPL  could  lead  to  reduced 
productivity  since  well-protected  workers  may 
tend  to  provide less  effort  compared  with  less
protected ones. 

• Finally,  if  asymmetric  EPL for  fixed  term  and
temporary 
segmentation 
labour  produces 
outcomes,  productivity growth may  suffer  in 
light  of  the  reduced  incentives  to  invest  in
human capital by workers that find themselves
trapped in precarious jobs (Booth et al 2002).

can 

that 

through  which  EPL 

Empirical  analysis  provides some support  to  the
view 
strict EPL  can  have  negative
implications  for productivity  growth.  Although 
country-level  studies  are mostly  inconclusive  on
the  relation  between  alternative  measures  of
productivity  growth  and  EPL  (e.g.,  Nickell  and
Layard,  1999),  analyses  using  disaggregate  data
and  exploiting  identification  strategies  based  on
the presence of stricter EPL for part of the sample 
often find  evidence supportive  of  the  various
channels 
affect
productivity. Burgess et al. (2000) and Caballero et
al.  (2004)  analyse  sectoral  data  in  cross-country
panels and show that in countries with higher EPL
inter-sectoral 
slowed  down.
Bassanini  et  al.  (2009)  in  a  cross-country  sectoral
panel  show  that  TFP  growth  tends  to  be  lower  in 
sectors where  EPL  is more  likely to  be  binding.
Autor  et  al.  (2007)  and  Cingano  et  al.  (2010)  on,
respectively, US and Italian data, support the view
that firms with stronger EPL constraints also have
a  weaker  EPL  performance.  Pierre  and  Scarpetta
(2006)  in  a  cross-country  sample  show that  the
firms  that  are  the  most  innovative  are  also  those
being  mostly  negatively  affected  by  EPL.  Ichino
and  Riphahn  (2005)  and  Riphahn  (2004) provide
evidence on the negative relation between EPL and
workers effort. 

adjustment 

is 

EPL  coupled with  flexibile working  hours may
help mitigating 
impact  of
temporary shocks, but is also likely to hamper the

the  employment

capacity  of  the economy  to  adjust  to  external
imbalances.  EPL  coupled  with flexibility  of
working  hours  helps mitigating  the  impact  of
temporary shocks to  headcount  employment,  thus
reducing  the  risk  that  transitory  shocks  produce
longer-term  effects.  However, as  long  as  EPL
hampers  the  reallocation  of  labour,  the  necessary
inter-sectoral  adjustment  that  needs  to  take  place 
between  the  tradable  and  the  non-tradable  sector
during  phases  of  adjustment  to  correct  large
current  account imbalances  is  also  slowed  down. 
Moreover,  to  the  extent  that  EPL  increases  the
effective  labour  costs  borne  by  the  employers,
excessively strict EPL may also translate into cost
trading
price  competitiveness  compared  with 
partners.  EPL 
help
reforms 
adjustment  not  only  by reducing  obstacles  to
sectoral  reallocation  but  also by  bringing  gains  in
terms  of  cost  competitiveness  in labour market
setting where wages are rigid downward.

therefore  may

Table II.2.6:

Employment shift from non-tradables to
tradables and EPL Insights from regressions 
analysis (6 EU countries, 1985-2008)

Dependent variable: Delta log(E_tr_ntr)

Sample: Countries with average 
current account balance/GDP<-1%

Explanatory variables

Delta log(E_tr_ntr), 1 lag

Log(E_tr_ntr), 1 lag

EPL, 1 lag

Constant

Observations

R-squared

Number of countries

0.1

[0.0549]

-0.215**

[0.0322]

-0.0229+

[0.00961]

0.0405+

[0.0162]

88

0.355

6

(1) ** p<0.01, * p<0.05, + p<0.1; the specifications include
country and year fixed effects. Estimation method: Least
Square Dummy Variables, standard errors robust with
respect to heteroschedasticity and within country
autocorrelation. Delta log(E_tr_ntr): growth rate in relative
employment in tradable versus non tradable sectors.
Tradables include manufacturing, agriculture and trade,
transport and communication services. Non-tradables
include the rest of market services and construction.
Log(E_tr_ntr): log relative employment in tradable versus
non tradable sectors. EPL: OECD indicator for overall 
employment protection legislation. The counties with
average current account balance/GDP ratios below -1%
over the period are as follows: Greece, Spain, Poland,
Portugal, Slovakia, United Kingdom.
Source: OECD and EUROSTAT (National Accounts)

The  issue  is not  studied  extensively in  existing
analyses,  but  a  simple  panel  regressions  support
the  view  that  EPL matters  for  the  reallocation  of
labour  between  the  tradable  and  the  non  tradable 
the  process  of  macroeconomic
sector  during 

Part II

Thematic chapters

rebalancing.  Table  II.2.6 reports  results  of  a
regression  analysis where  the  growth  rate  of  the
share  of  employment in  the  tradable  and  the  non-
tradable  sector  is  explained  by  the  stringency  of
EPL.  The  specification  includes country  and  time
effects and takes into account the dynamics in the
adjustment  of  relative sectoral  employment.  The
expectation is that the share of employment in the
tradable sector needs to grow in countries that are 
in  the  process  of  adjusting  large  current  account
deficits. The analysis is therefore run separately for
EU  countries with  relatively high  current  account
deficits  over  the  sample  period  (larger  than  1  per
cent of GDP on average). In line with expectations,
EPL  turns  out  to  have  a  significantly  negative
effect on labour reallocation towards tradables for
these countries.

2.5. 

IMPROVING THE DESIGN OF EPL

2.5.1. Assessing reform needs

institutions 

The desirability and design of EPL reforms depend
on  the  seriousness  of  the  problems  in  the  labour
market,  on  current  EPL  settings,  and  on  other
relevant  institutional  framework  conditions.  It
depends  first  and  foremost  on  the  extent and  type
of  labour market malfunctions,  on  current  EPL
for 
characteristics, 
the
relevant 
implementation  and  enforcement  of 
the  EPL
system,  including  the  judiciary  system,  on  other
labour
framework  conditions, 
market  institutions,  notably  the  unemployment
benefit  and 
the
availability  of short-term  working  schemes,  and
the  framework  for  active  labour  market  policies,
which  contribute  to  determine  the  effects  of  EPL
on  labour market  outcomes  and  the  feasibility  of
EPL reforms.

the wage  setting  system, 

including  other 

labour

and
market 
Assessing  whether 
macroeconomic  performance  can  benefit
from
EPL reform requires analysing data on job market
flows  and  unemployment  composition. As  shown
previously,  EPL  is  expected  to  produce  effects
especially 
inflows  and 
outflows  in  unemployment,  and  in  terms  of
increased  incidence  of  long-term  unemployment.
Constant  monitoring  of  labour market  flows  is
especially 
to  assess whether  EPL 
strictness is producing undesired results.

in terms  of  reduced 

important 

93

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Labour Market Developments in Europe, 2012

EPL  quantitative  indicators  provide  a  prima-facie 
assessment  of  EPL  settings  and  permit  cross-
country  benchmarking.  The  available 
indexes 
measuring  EPL  strictness  are  an  utmost  useful 
instrument
to  evaluate  the  evolution  of  EPL 
legislation,  perform  cross-country  comparisons, 
have a synthetic picture of the main EPL features. 
Regarding the bechmarking of EPL indexes across 
countries,  alternative  benchmarks  could  be 
considered.  In  addition  to  benchmarking  against 
the  EU  average,  a  comparison  against  country 
groups
terms  of 
flexicurity models and labour market institutions at 
large appears recommendable. 

similarities 

presenting 

in 

into 

the  specific  provisions 

The  assessment  of  EPL  characteristics  should  go 
beyond  the  comparison  of  quantitative  indicators 
and  dig 
in the 
legislation.  This  is  dictated  by  a  number  of 
reasons. First, EPL indicators are not immune from 
drawbacks,  since  not  all  aspects  of  the  legislation 
can  be  easily  codified  and  since  there  is  a 
fundamental  uncertainty  on  the  weights  to  be 
attributed  to  different  legislation  elements  when 
second 
building 
fundamental  reason  is  that  only  a  satisfactory 
understanding  of 
the 
identification  of  concrete  paths  for  reforms.  The 
third reason is that only a proper understanding of 
the  legislation  allows  pinning  down  the  reasons 
underlying 
satisfactory 
implementation and enforcement.

legislation  permits 

a  more 

synthetic 

indexes. 

The 

less 

the 

or 

in 

role 

laws 

have 

individual 

institutions 

determining 

that  play  a 

in  collective  or 

scrutiny.  EPL 
by 

The 
the 
implementation  and  enforcement  of  EPL  also 
direct 
deserve 
implications 
minimum 
requirements  for  employers  to  be  respected  when 
dismissing workers and also an indirect impact, by 
setting  the  starting  point  for  dismissal  conditions 
included 
labour 
contracts.  Depending  on  the  collective  bargaining 
practice,  countries  with  relatively  flexible  EPL 
legislation  may  be  characterised  by  a  de-facto 
relatively  protected  system,  in  that  EPL  standards 
the 
more  generous 
legislation may be included in collective contracts. 
At 
the  minimum  requirements 
provided by the legislation may de-facto be lower, 
because  enforcement  of  the  legislation  provision 
may  be  weak 
in  some  countries.  A  proper 
understanding  of  the  functioning  of  the  litigation 
system  and  of  the  judiciary  in  this  respect  is  key, 

those  provided 

the  opposite, 

than 

in 

94

not  only  to  assess  whether  EPL  laws  are  actually 
enforced,  but  also  to  gauge  the  costs  and  the 
inefficiencies  associated  with  the  enforcement 
mechanism,  and  therefore  with  the  overall  EPL 
system.

Evaluating  the  interaction  of  EPL  with  other 
labour  market  institutions  is  key  to  assess  the 
impact of EPL on labour market outcomes and the 
feasibility of alternative avenues for reform. It was 
previously  pointed  out  that  the  effects  of  EPL  are 
mediated  by  other  labour  market  institutions, 
notably  wage  setting  institutions:  if  wages  are 
sufficiently responsive, EPL would partly translate 
into moderate wage claims rather than into reduced 
job  creation.  Other  institutions  are  key  for  the 
the 
feasibility  of  EPL  reforms.  In  particular,
absence  of  adequate  social  safety  nets  and 
unemployment 
render  major  EPL 
reforms  hardly  feasible  in  the  presence  of  weak 
the  social  costs 
cyclical  conditions  due 
associated  with  increased  risk  of  job  destruction. 
Conversely,  the  presence  of  efficient  ALMPs  and 
employment services may reduce the risk of long-
term  unemployment  at  given  degree  of  EPL 
strictness, thereby reducing the urgency of a major 
EPL overhaul. 

insurance 

to 

2.5.2. Paths for desirable reforms

There is no single way to reform EPL systems, but 
rather  different  reform  paths  that  depend  on 
country  characteristics.  The  specific  scope  and 
direction  of  reform  depends  on  the  ranking  of  the 
labour market problems to be tackled, on the EPL 
features  that  can  better  contribute  to  pursue  the 
reform objectives,  on  the  need  to  address  other 
ensure 
institutions 
effectiveness or feasibility. 

strictly  EPL 

than 

to 

• Depending  on 

the  severity  of  economic 
challenges  involved  and  on  the  prevailing 
policy  settings,  in  some  cases  reforms  in 
selected  EPL  aspects may  be  sufficient,  while 
in  others  the  EPL  system  needs  to  be  more 
fundamentally re-thought. 

• Reforms may concern the EPL regime for new 
hires  or  affect  also  the  regime  of  current 
employees. While reforms limited to new hires 
have  the  advantage  of  bringing  benefits  in 
terms of job creation while limiting the impact 

on  job  destruction,  their  impact  on  sectoral 
reallocation is more limited.

•

In  some  cases,  reforms  to  be  effective  or 
feasible  cannot  be  confined  to  EPL  only.  For 
instance,  in  some  countries  reforming  EPL 
requires  also  putting 
in  place  alternative 
insurance  mechanism  against  increased  risk  of 
dismissal  (e.g.,  strengthening  unemployment 
insurance),  while  in  others  EPL  should  be 
accompanied  by  an  attempt  to  improve  the 
functioning  of  the  judicial  system  in  settling 
labour  disputes.  Support  by  social  partners  is 
functional  to  the  effective  implementation  and 
social sustainability of ambitious EPL reforms.

Countries  having  to  reduce  EPL  for  permanent 
contracts  may  have  to  follow  different  paths 
depending  the  main  characteristics  of  their  EPL 
regime.  A  series  of  specific  considerations  are  in 
order:

(i)  EPL  reforms  for  individual  dismissals  should 
aim  at  reducing  deadweight  costs  associated  with 
lengthy  and  uncertain 
heavy  procedures  and 
dispute settlement mechanisms following claims of 
unfair  dismissal.  As  discussed  previously,  these 
deadweight  costs  are  detrimental  both  to  the 
employer  and  the  employee,  to  different  extents 
depending  on  the  specific  context.  A  number  of 
reform  measures,  rather  complementary 
than 
alternative, can be identified in those cases:

• Lengthening the trial period. Excessively short 
trial  periods  may  not  permit 
sufficient 
monitoring  of  workers  and  raise  the  risk  of 
disciplinary  dismissals  or  economic  dismissals 
for  workers'  unsuitability.  As  long  as  these 
dismissals are challenged in court, and dispute 
settlement  is  long  and  uncertain,  costs  may 
arise for both the employer and the employee. 

• Reducing  the  compensation  due  to  workers  in 
case  of  ascertained  unfair  dismissal  and 
compared  to  that  available  irrespective  of  the 
reason for dismissal (other than disciplinary). A 
key  factor  determining  the  extent  to  which 
deadweight losses can impinge on EPL systems 
is  whether  compensations  to  the  employee  are 
mostly  due  only  in  case  of  unfair dismissal.  If 
this  is  the  case,  the  incentive  for  workers  to 
appeal  against  dismissal  is  strong.  Reforms  in 

Part II

Thematic chapters

this  direction  could  comprise  re-defining  the 
cases  justifying  the  compulsory  reinstatement 
of employees and their modalities.

• Modifying the definition of unfair dismissal. In 
some  cases,  the  definition  of  fair  economic 
dismissal  can  be  overly  restrictive,  thereby 
leading  to  frequent  appeals  on  the  part  of 
workers,  high  settlement  costs  and  a  highly 
inefficient system of protection. In other cases 
the problem could lie in a highly discretionary 
role  played  by  courts  in  judging  economic 
fair 
in 
dismissal  cases 
economic  dismissals 
in 
relatively  broad  terms. (31)  In  this  respect,  a 
forward-looking  definition  of  fair  economic 
reason  for  dismissal  making  reference  to  the 
need  for  employers  to  cope  not  only  with 
existing  but  also  with  forthcoming  expected 
difficulties could make a difference.

the  presence  of 
that  are  defined 

• Tackling  procedural  costs  and  delays  and 
enhancing 
the  dispute 
the  efficiency  of 
settlement  system.  In  particular,  incentives 
could  be  provided  for  parties  to  agree  on  pre-
trial  settlements  of  disputes  and  fast-track 
procedures 
could  be 
labour 
introduced.

trials 

for 

(ii)  Protection  systems  based  on  lengthy  notice 
periods  and  high  severance payments  can  also 
imply  efficiency  costs  if  not  properly  designed. 
The  alternative  of  generously  compensating 
workers  irrespective  of  the  specific  reason  for 
dismissal  (other  than  disciplinary)  is  not  free  of 
costs either, since employers may find themselves 
liquidity-constrained  during  crisis  period,  when 
individual 
collective  dismissals  or 
dismissals  for  economic  reasons  may  imply  high 
monetary dismissal payments concentrated in time. 
High  severance  payments  growing  with  seniority 
can  also  imply reduced  voluntary  mobility  for 
senior  employees,  aware  of  losing  severance 
payments  entitlements  if  moving  to  different 
employers.  Overall,  these  costs  may  imply  a 
relevant impact on labour market outcomes (which 
is confirmed by the high significance of the notice 
and  severance  payment  EPL  sub-indicator  in  the 

frequent 

(31) Ichino et al. (2003) show on Italian data that the distinction 
between  disciplinary  and  objective  is  blurred  by  firms' 
perceptions  about  what constitutes  a worker  misbehaviour 
which changes over the cycle and the financial position of 
the firm.

95

European Commission

Labour Market Developments in Europe, 2012

empirical analysis) and on the adjustment capacity 
of the economy. Reforms could go in the following 
directions.

•

Improving  the  design  of  severance  payments. 
Severance  payments  growing  with  seniority 
without  limit  may  reduce  voluntary  mobility 
and  imply  unaffordable  dismissal  costs  for 
established firms mostly employing permanent 
workers.  The  presence  of  caps  to  overall 
severance  payments  can  help  tackling  this 
issue.  Replacing  notice  periods  for  severance 
payments  could  also  help  mildening  financial 
constraints. 

• Reforming 

of 

the 

severance 
financing 
payments.  The  financial  constraints  associated 
with  the  payment  of  large  severance  payment 
lump  sums  can  be  tackled  by  setting  up  funds 
regularly financed by a potentially large pool of 
employers  that  are  activated  when  dismissals 
take place. Depending on the specific design of 
the  fund,  the  system  can  involve  a  different 
degree of risk sharing and re-distribution across 
employers.  Funds  defining  employee-specific 
individual severance payment accounts that are 
portable  across  employers  (e.g.,  the  system 
currently  prevailing 
the 
additional  advantage  of  encouraging  voluntary 
job-to-job mobility.

in  Austria)  have 

•

In  countries  characterised  by  a  segmentation 
problem  reforms  should  bed  aimed  at  aligning 
EPL  conditions  for  regular  and  fixed-term 
contracts.  In  a  number  of  EU  countries  the 
problem  is  not  only  or  not  fundamentally  that 
of  avoiding  excessively  strict  or  inefficient 
EPL  for  individual  contracts,  but  reducing  the 
large  asymmetry  between  EPL  for  permanent 
and fixed-term contracts, with a view to tackle 
the  associated  segmentation  of  the  labour 
market.  A  number  of  Country  –Specific 
Recommendations  were  issued  in  2011  in  the 
framework  of  the  EU  semester  to  countries 
with  a  need  to  labour  market  segmentation 
(Slovenia, Spain, France, Italy).

• Sequencing  reforms.  As  discussed  previously, 
reform  action  aimed  at  improving  job  creation 
in  a  number  of  EU  countries  took  place  in 
terms  of  enhanced  entry  flexibility,  mostly  in 
terms  of  reduced  requirements  for  the  use  of 

96

fixed-term  contracts  and  higher  availability  of 
flexible contractual forms. The consequence of 
the  piece-meal  reform  strategy  was  to  create 
employment  at  the  expense  of  an  increased 
degree  of  labour  market  segmentation.  The 
experience  of  these  countries  is  useful  for  the 
design of reform strategies looking forward: in 
absence of appropriate reforms concerning exit 
flexibility,  the  risk  is  that  flexibilisation  of 
entry  alone  results  into  segmented  labour 
markets.

• Defining  priorities.  In  some  countries  (e.g., 
Spain),  the  analysis  of  EPL  settings  suggests 
that  segmentation  is  not  so  much  the  outcome 
of  very  flexible  EPL  for  fixed-term  contracts. 
For these countries, the origin of segmentation 
may  lie  in  the  regime  for  EPL  for  regular 
contracts. However, the  way  the legislation on 
fixed  term  contracts  is  applied  and  enforced 
can also play a role. (32) The high incidence of 
fixed-term  contracts  in  other  countries  (e.g., 
Poland)  may  instead  be  mainly  linked  to  a 
history of a relatively flexible regime for fixed-
term contracts.

in 

• The debate on the single contract. For countries 
with  segmented  labour  markets  it  has  been 
emphasized in the recent debate the desirability 
of  a  “single”  labour  contract. (33)  Although 
there  is  no  unique  single-contract  definition 
and  proposals 
the  debate  differ  quite 
substantially, the broad aim of the introduction 
of  a  single  labour  contract  is  that  of  better 
aligning EPL for permanent and fixed contracts 
while  at  the  same  time  reducing  the  number 
and typology of available fixed term contracts. 
The  radical  application  of  the  idea  of  a  single 
contract  would 
labour 
contract,  with  a  degree  of  protection  designed 
in  such  a  way  to  grow  over  time,  replacing 

foresee  a  unique 

(32) A  typical  example  is  that  of  Spain,  whose  EPL  index  for 
fixed-term  contracts  rank  high  in  light  of  relatively  strict 
limit of the renewal and maximum cumulated periods with 
for the use of fixed-term contracts. However, for years the 
maximum number of fixed-term contract renewals applied 
to  single  undertakings,  with  the  implication  of  the  same 
worker  possibly  receiving  a  large  number  of  consecutive 
fixed-term  contracts  within  the  same  group,  as  long  as 
different firms appear as counterparts. The 2010 Spain EPL 
reform  has  tackled  this  issue  by  applying  the  maximum 
number of fixed term contract renewals at group rather than 
firm level.

(33) See, e.g., Cahuc and Kramarz (2004), Boeri and Garibaldi 

(2008), Andrés et al. (2009), Bentolila (2010).

Part II

Thematic chapters

existing  permanent  and fixed  term  contract 
typologies. Despite being often advocated as a 
desirable  instrument  to  tackle  segmentation, 
reforms  introducing  a  “strictu-sensu”  single 
contract have not been carried out yet, notably 
in  light  of  the  opposition  by  social  partners  to 
the elimination of available fixed term contract 
typologies or to the substantial “flexibilisation” 
of 
reforms 
aligning  the  conditions  for  permanent  and 
fixed-term  contracts  have  nonetheless  taken 
place, notably in Portugal and Spain. (34)

regular  employment.  Recent 

In  countries  with  low  labour  market  participation 
of second earners, young, or old-age workers, EPL 
reforms  may  contemplate  easing  conditions  for 
that 
fixed-term  contracts.  In  some  countries 
situation  is,  quite  the  opposite,  one  where  a  strict 
regulation  of  fixed-term  contracts  risks  deterring 
employment and labour participation for categories 
of  workers  more  likely  to  benefit  from  temporary 
employment  opportunities.  Romania  for  instance 
has recently taken steps to reform the Labour Code 
with a view to increase the opportunities for fixed-
term  employment.  Lithuania  received  a  Country-
Specific  Recommendation  aimed  at  fostering 
reforms  capable  of  triggering  a  better  use  of 
temporary contracts. 

improve 

The  particularly  precarious  employment  situation 
for the youth in some countries requires revisiting 
the system of labour contracts system with a view 
transition.  In 
the  school-to-work 
to 
particular, 
the  development  of  apprenticeship 
labour  contracts  combining  work  with  training 
could  be  an  effective  instrument  to  ease  labour 
market  entry  for  the  youth,  as  shown  by  the 
successful  experience  of  a  number  of  countries 
(e.g.  Austria,  Germany, 
the  Netherlands…). 
Apprenticeship  contracts  offer  the  advantage  of 
providing  marketable  skills  to  young  workers 
while  at  the  same  time  giving  incentives  to  firms 
that retain the workforce on which they have made 
an 
training.  Fiscal 
incentives can play a role in stimulating the supply 
of  apprenticeships.  However,  the  effectiveness  of 
apprenticeship  contracts 
the  gap 
between  school  and  permanent  employment 
that  apprenticeships  are  not  only 
requires 

in  bridging 

investment 

terms  of 

in 

motivated  by  the  purpose  of  receiving  lower 
taxation,  but  that  are  part  of  a  genuine  long-term 
strategy  to  recruit  and  train  the  workforce.  In  this 
respect,  the  role  of  social  partners  is  key  for  the 
effective 
of 
apprenticeship contracts.

implementation 

design 

and 

countries 

(Spain,  Greece),  and 
current 
accumulated 

labour  market 
facing  major 
In 
challenges,  the  reform  of  the  EPL  needs  to  be 
sufficiently  ambitious  and  embedded  in  a  wide-
ranging reform action  with a  view to improve not 
only the capacity of the economy to create jobs but 
also  growth  and  adjustment  prospects.  A  number 
of  EU  countries  facing  challenges  linked  to  low 
potential  growth  (Italy,  Portugal,  Greece),  high 
unemployment 
the 
to 
account 
correction  of 
imbalances (Greece, Spain, Portugal) have recently 
taken action or are in the process of taking action 
to  ambitiously  reforming  the  EPL  system  (see 
Chapter 4 of this report) in conjunction with other 
aspects  of  the  labour  market.  Countries  facing 
major labour market challenges and  having to put 
in  place  an  adequate  structural  reform  package  to 
improve the  growth potential and ease adjustment 
will  also  have  to  find  the  right  balance between 
EPL  reform  elements  only  concerning  new  hires 
(which permit to limit the job destruction impact of 
the  reform)  and  elements  extending  to  current 
employees  with  a  view  to  foster  labour  mobility 
and ease sectoral relocation. In Portugal, the recent 
reform  of  severance  payments  extends  to  current 
employees without reducing matured entitlements.

2.6.  CONCLUSIONS

against  dismissal.  Differences 

EU  countries  differ  considerably  in  their  EPL 
systems.  Differences  concern  not  only  the  degree 
of  strictness  of  EPL,  but  also  the  composition  of 
the  available  instruments  to  provide  protection  to 
are 
workers 
remarkable  for  the  protection  of  regular  labour 
contracts, but non-negligible differences are found 
also 
terms  of  regulations  for  fixed-term 
contracts.  Further  analysis  could  be  useful  to 
assess  to  what  extent  these  large  differences  are 
among  the  factors  that  underlie  the  very  different 
response of EU labour markets to the crisis.

in 

(34) See, e.g., Turrini (2011) on the way the recent programme 
of  EPL  reforms  in  Portugal  contribute  to  align  conditions 
for permanent and fixed-term contracts.

EPL  affects  labour  market  outcomes  notably  by 
reducing not only job destruction but also and most 
notably  job  creation.  Sclerotic  labour  markets 

97

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Labour Market Developments in Europe, 2012

linked to excessively high EPL are not necessarily 
associated with higher overall unemployment rates 
but tend to be characterised by a higher incidence 
long-term  unemployment  and  by  higher 
of 
unemployment  rates  for  the  young.  Segmentation 
of 
labour  market  between  workers  with 
temporary  and  permanent  contracts  is  also  a 
typical  outcome  of  strict  EPL  for  open-ended 
contracts  especially 
if  coupled  with  flexible 
regimes for fixed-term contracts. 

the 

The impact of EPL is not limited to labour market 
outcomes. By affecting the extent to which labour 
can  easily  be  re-allocated  across  firms  and 
industries, EPL has indirect effects on productivity 
and  then  economic  growth  and  on  the  capacity  of 
the  economy  to  adjust  with  a  view  to  correct 
macroeconomic imbalances.

into 

The  assessment  of  reform  needs  is  helped  by  an 
indicator-based approach but has to go beyond and 
look 
labour  market  performance  and 
legislation  aspects,  including  implementation  and 
enforcement.  Quantitative  EPL  indicators  provide 
a  useful  prima-facie  gauge  of  EPL  strictness  and 
features  and  permit  cross-country  benchmarking. 
However, a proper assessment of reform priorities 
needs  to  go  beyond  and  to  take  into  account  a 
number of aspects:

by 

not 

• The extent to which the performance of labour 
markets appears to exhibit typical malfunctions 
associated  with  overly  strict  EPL  should  be 
evaluated 
at 
looking 
unemployment rates, but also at data on labour 
market  flows.  Theory  and  empirical  evidence 
shows  that  EPL  produces  its  main  effects  on 
this  respect, 
labour  market  dynamics.  In 
availability  of  data  on  job  finding  and  job 
separation  rates  and  on  transitions  between 
fixed and permanent contracts is key.

only 

including 

• The implementation and enforcement aspect of 
the  working  of  dispute 
EPL, 
settlement 
judiciary 
the 
framework, should be looked at, as well as the 
way  the  legislation  interacts  with  practice 
followed in collective and individual contracts.

systems 

and 

• The  effectiveness  of  and  feasibility  of  EPL 
in 
labour  market 

reforms  need  also 
conjunction  with 

to  be  evaluated 

other 

98

the  wage 

institutions,  notably  the  unemployment  benefit 
system, 
the 
availability  of  short-term  working  schemes, 
and  the  framework  for  Active  Labour  Market 
Policies.

system, 

setting 

• There is no single way to reform EPL systems, 
but rather different reform paths that depend on 
country characteristics. The specific scope and 
direction  of  reform  depends  on  the  ranking  of 
the  labour  market  problems  to  be  tackled,  on 
the  EPL  features  that  can  better  contribute  to 
pursue  the  reform  objectives,  on  the  need  to 
address  other  institutions  than  strictly  EPL  to 
ensure  effectiveness  or  feasibility.  Depending 
on 
the  severity  of  economic  challenges 
involved and on  the prevailing policy settings, 
in some cases reforms in selected EPL aspects 
may  be  sufficient,  while  in  others  the  EPL 
system  needs  to  be  more  fundamentally  re-
is 
considered.  Support  by  social  partners 
functional  to  the  effective  implementation  and 
social sustainability of ambitious EPL reforms.

• Depending on the organisation of EPL systems, 
some countries may have mostly to reform the 
definition  of 
the 
implications  of  unfair  dismissal  or  the  dispute 
settlement  mechanism,  while  others  may  have 
to  focus  on 
the magnitude,  design  and 
financing of severance payments.

admissible  dismissals, 

• For  countries  with  segmentation  problems  the 
priority  may  be  to  align  the  protection  for 
permanent  contracts  with  that  of  fixed-term 
contracts, while keeping an overall EPL system 
compatible  with  job  creation  and  a  dynamic 
labour market.

• The  serious  youth  unemployment  problem  in 
some  countries  require  the  strengthening  of 
contractual  forms  easing  the  transition  from 
school 
including  well-designed 
apprenticeship systems.

to  work, 

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Handbook  of  Labour  Economics,  vol.  3,  3029-
3084, Amsterdam: Elsevier.

Economic 

and 

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Pissarides,  C.  (2010),  "Why  do  Firms  Offer 
Employment  Protection?",  Economica,  77,  613-
636.

Quintini,  G.  and  S.  Martin  (2006),  "Starting  Well 
or Losing their Way?: The Position of Youth in the 
Labour  Market 
in  OECD  Countries",  OECD 
Social, Employment and Migration Working Paper
No. 39, Paris: OECD Publishing. 

Räisänen,  H.,  J.  Alatalo,  K.  K.  Henriksen,  T. 
Israelsson  and  S.  Klinger  (2012), "Labour  Market 
Reforms  and  Performance  in  Denmark,  Germany, 
the 
Sweden  and  Finland",  Publications  of 
[Finnish]  Ministry  of  Employment  and 
the 
Economy, No. 19/2012.

Riphahn,  R.  T.  (2004),  "Employment  Protection 
and Effort among German Employees", Economics 
Letters, vol. 85(3), 353-357.

Saint  Paul,  G.  (2002),  "Employment  Protection, 
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International  Specialisation,  and 
European Economic Review, 46, 375-395.

Turrini,  A.  (2011),  "EPL  Reforms  in  Europe:  A 
Portuguese  Way  to  Single  Contract  Outcomes?", 
Vox, 10 August 2011.

Von  Wachter,  T.  and  S.  J.  Davis  (2012),  
"Recessions and the Costs of Job Loss", Brookings 
Papers on Economic Activity.

APPENDIX 1

A decade of labour market reforms in the EU

A1.1.  OPERATIONALISING  THE DIRECTION  OF 

LABOUR MARKET REFORMS

(henceforth 

Reforms  potentially  leading  to  better  employment 
outcomes 
employment-friendly 
reforms)  reducing  taxation  on  labour,  regulations, 
generosity  of  out-of-work  support,  and  improving 
incentives  to  supply  labour  and  labour  market 
matching are distinguished as follows. 

Labour Taxation

• Social  security  contributions  (SSCs):  enacted 
measures  decrease SSCs  for  employers  and/or 
for employees.

• Other benefits (means-tested benefits, sickness, 
and family-related schemes): enacted measures 
decrease
(level,  coverage, 
duration)  or  tighten the  eligibility  conditions 
for other benefits.

the  generosity 

Active Labour Market Policies

• Public  employment  services  (PESs):  enacted 
measures  enhance the  effectiveness  of  PESs 
and its services.

• Direct job creation and employment  subsidies: 
enacted  measures  increase the  availability  of 
direct  job  creation  schemes  and  the  generosity 
of the incentives to hire vulnerable groups.

• Level  of  labour  income  taxation:  enacted 
measures  decrease the  rate  of  labour  income 
taxation and its coverage.

• Training  and  Special  Schemes:  enacted 
measures enhance the quality and frequency of 
the provided training.

• Progressivity  of 

taxation: 
labour 
enacted measures make labour income taxation 
less progressive.

income 

Unemployment Benefits

• Unemployment  insurance:  enacted  measures 
decrease the  generosity  (replacement  rate, 
the  unemployment 
coverage,  duration)  of 
eligibility 
tighten
insurance  benefits  or 
conditions/job availability requirements.

• Unemployment  assistance:  enacted  measures 
decrease the  generosity  (replacement  rate, 
the  unemployment 
coverage,  duration)  of 
assistance  benefits  or 
eligibility 
tighten
conditions/job availability requirements.

Other benefits

•

In-work  benefits:  enacted  measures  decrease
the generosity (level, coverage, duration) of in-
work benefits, tighten the eligibility, remove or
decrease the possibility to cumulate them with 
other benefits or wages.

Employment Protection Legislation

• Permanent  contracts:  enacted  measures  loosen
the  definition  of/conditions  for  dismissals, 
decrease the  notice  period  duration  and  the 
level of  severance payments,  increase the trial 
period,  or  reduce the  procedural  requirements 
for dismissals under permanent contracts.

• Temporary 

contracts: 

enacted  measures 
increase the  maximum  cumulated  duration  of 
fixed-term  and  temporary  contracts  and  the 
maximum  number  of  renewals,  or  loosen the 
definition  of  the  cases  where  fixed-term  and 
temporary contracts can be used.

Pensions, Early retirement, and disability schemes

• Contributions:  enacted  measures  decrease the 
level of contributions for the pension/disability 
schemes.

• Eligibility 

conditions: 

enacted  measures 
decrease the coverage or tighten the eligibility 
retirement/
for 
conditions 
disability benefits.

pension/early 

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Labour Market Developments in Europe, 2012

• Pensions  - Retirement  age:  enacted  measures 
increase retirement  age  and  penalties/age  for 
early retirement schemes.

• Pensions  – Entitlements:  enacted  measures 
decrease the  amount  of  pension  benefits  and 
allowances, or increase the taxation of pension 
benefits.

Working Time Organization

• Flexible  working  time  arrangements:  enacted 
measures  increase working  time,  decrease the 
payment  of  extra  hours,  make  working  hours 
more flexible,  introduce or  extend schemes  of 
banks  of  hours/hours  off  instead  of  overtime 
the  use  of  part-time 
pay,  or  encourage
contracts.

• Participation-friendly 

extend

training, 

schemes: 

enacted 
measures 
sabbatical  or 
longer/more 
leaves,  allow  for 
educational 
generous maternity/paternity/parental  leave  or 
leave  for  employees  that  have  a  sick  relative, 
improve reconciliation of family and work life, 
or  promote the  creation  of  kindergarten  and 
taking hours off to take care of the children.

Immigration and Labour-Mobility Policies

•

Immigration: enacted measures reduce barriers 
to immigration, the quotas for immigrants with 
specific  professional  background,  or  improve
the  immigrants'  integration  through  education 
and initial support.

• Labour  mobility:  enacted  measures  increase
support for geographical labour mobility within 
the country.

If  the  measures  present  the  characteristics  listed 
above, a negative score, arbitrarily normalised to -
1 is assigned, if the effects of the measure go in the 
opposite  direction,  score  1  is  assigned.  In  a  few 
cases,  if  the  direction  of  the  reform  is  ambiguous 
or not easily classifiable on the basis of the above 
criteria, score 0 is assigned.  The algebraic sum of 
the direction scores in a given domain or field, in a 
given country, in a given year, provides a synthetic 
gauge of the reform stance.

Wage Bargaining Framework

• Statutory and contractual  minimum  wages and 
collective  minimum  via  tripartite  agreements: 
statutory  and 
enacted  measures  decrease
tripartite 
contractual  minimum  wages/ 
agreements  decrease
indicative  wage 
threshold  for  lower  level  wage  negotiations 
beyond  past  records,  or  remove/decrease non-
wage emoluments.

the 

• Government 

interventions, 

tripartite 
agreements,  and  other  measures  on  wage-
bargaining  mechanism:  enacted  measures, 
governmental 
tripartite 
interventions 
agreements: 

or 

− decrease

or 
bargaining 
(automatic) extension of collective agreements.

coverage 

the 

− reform 

in  a 

the  bargaining  system 

less 
centralized way,  for  instance  by  removing  or
the  "favourability  principle",  or 
limiting
introducing/extending
to 
derogate  from  higher  level  agreements  or  to 
negotiate firm-level agreements.

possibility 

the 

− result  in  an  overall  reduction in  the  wage-

setting power of trade unions.

• Performance-related  pay:  enacted  measures 
increase the  share  of  the  variable  component 
(dependent 
workers' 
productivity/performance) on employees' wage 
or the share of firm's profits and bonus.

on 

104

Part II

Thematic chapters

A1.2.  DIRECTIONS  OF  REFORMS  BY  POLICY

Graph II.A1.3: Direction of job protection reforms by country

DOMAIN AND COUNTRY

(average yearly frequency over the 2000-2010 
period)

Graph II.A1.1: Direction of active labour market policy

reforms by country (average yearly frequency
over the 2000-2010 period)

0

-.5

-1

-1.5

.6

.4

.2

0

-.2

-.4

I

F

L
N

E
S

Nordic

U
L

E
D

E
B

R
F

T
A

E

I

Y
C

T
M

K
U

T
P

T

I

S
E

I

S

T
L

K
S

O
R

E
E

U
H

L
P

Z
C

G
B

V
L

L
E

Continental

Anglo-Saxon

Southern

Central and Eastern

Other reforms

Employment-friendly

L
N

I

K F
D

E
S

U
L

R
F

T
A

E
D

E
B

Y
C

T
M

E

I

K
U

T

I

S
E

T
P

K
S

I

O S
R

Z
C

T
L

G
B

V
L

U
H

E
E

L
E

L
P

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

Source: DG ECFIN LABREF database.

Graph II.A1.4: Direction labour taxation reforms by country

(average yearly frequency over the 2000-2010 
period)

Graph II.A1.2: Direction of early withdrawal reforms by

country (average yearly frequency over the
2000-2010 period)

.4

.2

0

-.2

-.4

.5

0

-.5

-1

-1.5

K
D

I

L F
N

E
S

T
A

E
D

U
L

R
F

E
B

Y
C

T
M

E

I

K
U

T
P

T

I

S
E

I

S

L
P

E
E

K
S

T
L

Z
C

G
B

L
E

O
R

V
L

U
H

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

K
D

I

E F
S

L
N

U
L

E
B

E
D

R
F

T
A

K
U

E

I

T

I

T
P

S
E

T
L

I

O S
R

V
L

G
B

L
E

K
S

Z
C

U
H

L
P

Other reforms

Employment-friendly

Nordic

Continental

Anglo-Saxon Southern

Central and Eastern

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

Source: DG ECFIN LABREF database.

105

European Commission

Labour Market Developments in Europe, 2012

Graph II.A1.5: Direction of other welfare benefit reforms by
country (average yearly frequency over the
2000-2010 period)

Graph II.A1.7: Direction of wage setting reforms by

country(average yearly frequency over the
2000-2010 period)

.6

.4

.2

0

-.2

.2

.1

0

-.1

-.2

E
S

I

K F
D

L
N

U
L

T
A

E
D

R
F

E
B

Y
C

E

I

T
M

K
U

T

I

T
P

S
E

I

E S
E

T
L

G
B

L
P

O
R

V
L

K
S

L
E

Z
C

U
H

K
D

E
S

I

L F
N

E
D

U
L

T
A

E
B

R
F

T
M

Y
C

K
U

E

I

T
P

T

I

S
E

V
L

I

E S
E

K
S

G
B

Z
C

L
P

O
R

U
H

T
L

L
E

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Other reforms

Employment-friendly

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

Source: DG ECFIN LABREF database.

Graph II.A1.6: Direction of unemployment benefit reforms by

Graph II.A1.8: Direction of working time reforms by country

country (average yearly frequency over the
2000-2010 period)

(average yearly frequency over the 2000-2010 
period)

.4

.2

0

-.2

-.4

.2

0

-.2

-.4

-.6

K
D

I

L F
N

E
S

U
L

E
B

E
D

R
F

T
A

Y
C

T
M

K
U

E

I

S
E

T
P

T

I

K
S

I

U S
H

L
P

V
L

E
E

L
E

Z
C

T
L

O
R

G
B

I

F

E
S

K
D

L
N

U
L

T
A

R
F

E
D

E
B

K
U

Y
C

E

I

T
M

T
P

S
E

T

I

I

S

E
E

U
H

K
S

L
P

T
L

Z
C

O
R

V
L

G
B

L
E

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Nordic

Continental

Anglo-Saxon

Southern

Central and Eastern

Other reforms

Employment-friendly

Other reforms

Employment-friendly

Source: DG ECFIN LABREF database.

Source: DG ECFIN LABREF database.

106

APPENDIX 2

Macroeconomic implications of EPL

Graph II.A2.1: Benchmarking employment protection regulation, main EPL sub-indicators

Source: OECD.

107

APPENDIX 2

Macroeconomic implications of EPL

Graph II.A2.1: Benchmarking employment protection regulation, main EPL sub-indicators - continued

Source: OECD.

108

Part II

Thematic chapters

Graph II.A2.1: Benchmarking employment protection regulation, main EPL sub-indicators - continued

(1) Legend: 
epl_reg – EPL for regular employment 
epl_temp – EPL for temporary contracts 
epl_dis – EPL, additional requirements for collective dismissals
Source: OECD.

109

European Commission

Labour Market Developments in Europe, 2012

Graph II.A2.2: Benchmarking employment protection regulation for individual dismissals, EPL sub-indicators for regular 

employment

Source: OECD.

110

Part II

Thematic chapters

Graph II.A2.2: Benchmarking employment protection regulation for individual dismissals, EPL sub-indicators for regular 

employment, continued

Source: OECD.

111

European Commission

Labour Market Developments in Europe, 2012

Graph II.A2.2: Benchmarking employment protection regulation for individual dismissals, EPL sub-indicators for regular 

employment, continued

(1) Legend: 
un_dis_def - definition of justified or unfair dismissal
trial_per - length of trial period
pro_inconv - procedural inconveniences (unweighted average of notification procedures and delay involved before notice 
can start)
not_sev4 - Length of notice period and severance pay at 9 months and at 4 years of tenure (unweighted average)
not_sev20 - Length of notice period and severance pay at 20 years of tenure (unweighted average)
un_dis_con - consequences of unfair dismissal (unweighted average of compensation following unfair dismissal and possibility 
of reinstatement following unfair dismissal)
Source: OECD.

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Part II

Thematic chapters

Table II.A2.1: Notice periods and severance pay for individual dismissals at three lengths of service, 2008

Blue collar
Austria
White collar
Austria
Blue collar
Belgium
White collar
Belgium
All workers
Czech Republic
Economic: Redundancy cases
Czech Republic
Blue collar
Denmark
White collar
Denmark
Liquidation of firm
Estonia
Economic: Redundancy
Estonia
Personal: Unsuitability
Estonia
All workers
Finland
All workers
France
Personal reasons
Germany
Economic: Operational reasons
Germany
Blue collar
Greece
White collar
Greece
All workers
Hungary
All workers
Ireland
Economic: Redundancy cases
Ireland
Blue collar
Italy
White collar
Italy
All workers
Luxembourg
Termination via PES
Netherlands
Termination via court
Netherlands
All workers
Poland
All workers
Portugal
All workers
Slovak Republic
Economic reasons
Slovenia
Personal: Incapacity
Slovenia
All workers
Spain
All workers
Sweden
United Kingdom All workers
United Kingdom Economic: Redundancy cases

Source: OECD.

9 months
0.5
1.4
1.2
3.0
2.0
2.0
0.7
3.0
2.0
2.0
1.0
0.5
1.0
0.9
0.9
0.0
1.0
1.0
0.2
0.5
0.2
0.5
2.0
1.0
0.0
1.0
0.5
2.0
1.0
1.0
1.0
1.0
0.2
0.2

Notice period
4 years
0.5
2.0
1.2
3.0
2.0
2.0
1.8
4.0
2.0
2.0
1.0
1.0
2.0
1.0
1.0
0.0
3.0
1.2
0.5
0.5
0.3
2.0
2.0
1.0
0.0
3.0
1.0
2.0
1.0
1.0
1.0
3.0
0.9
0.9

20 years
0.5
4.0
3.7
15.0
2.0
2.0
2.3
6.0
2.0
4.0
1.0
6.0
2.0
7.0
7.0
0.0
16.0
3.0
1.8
1.8
0.4
4.0
6.0
3.0
0.0
3.0
2.5
3.0
2.5
2.0
1.0
6.0
2.8
2.8

Severance pay

9 months
0.0
0.0
0.0
0.0
0.0
3.0
0.0
0.0
2.0
2.0
1.0
0.0
0.0
0.0
0.4
0.2
0.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.0
2.0
0.0
0.0
0.7
0.0
0.0
0.0

4 years
0.0
0.0
0.0
0.0
0.0
3.0
0.0
0.0
2.0
2.0
1.0
0.0
0.8
0.0
2.0
0.5
1.5
1.0
0.0
0.8
0.0
0.0
0.0
0.0
6.0
0.0
4.0
2.0
0.8
0.8
3.5
0.0
0.0
0.9

20 years
0.0
0.0
0.0
0.0
0.0
3.0
0.0
3.0
4.0
4.0
1.0
0.0
6.7
0.0
10.0
4.0
8.0
5.0
0.0
3.8
0.0
0.0
6.0
0.0
18.0
0.0
20.0
3.0
6.7
6.7
17.0
0.0
0.0
4.6

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Labour Market Developments in Europe, 2012

Table II.A2.2: Conditions under which individual dismissals are fair or unfair, 2008

Legal provisions

Austria

Belgium

Fair: dismissals for “serious reason”, including non-performance or lack of competence, and for operational reasons or other business needs. In the case of dismissal for operation 
reasons, the court may examine whether dismissal was actually necessary or whether it would have been possible to transfer the worker to another post.
Unfair: “socially unjustified” dismissals (which would affect the dismissed employee more unfavourably than other comparable employees of the company, or which would impair the 
interests of the employee to a greater degree than the interest of the firm in dissolving the employment relationship); and dismissals on inadmissible motive (e.g. discrimination, trade 
union activity or imminent military service). Employers intending to terminate older workers‟ contracts with a tenure of more than 2 years have to take social aspects into account if it 
appears to be difficult for such workers to get another job.

Unfair: for blue collar workers, dismissals for reasons which have no connection whatsoever with the capability or conduct of the worker or which are not based on the operational
needs of the undertaking, establishment or department. For white collar workers, the concept of abusive dismissal does not exist in regulation and one will refer to the general concept 
of abuse right. The right to lay off must be exerted for an aim for which it was granted, namely the interest of the company. Also unfair are dismissals of workers on maternity or
educational leave, and trade union and works council delegates.

Czech Republic

Fair: Dismissals for failure to meet performance requirements and for reasons of technological and organisational change.

Unfair: Dismissals based on discrimination (age, sex, colour, religion, union membership, etc.).

Denmark

Fair: Lack of competence and economic redundancy are legitimate reasons.

Estonia

Finland

France

Unfair: Dismissals founded on arbitrary circumstances” (blue collar workers) or “not reasonably based on the employee‟s or the company‟s circumstances”. Dismissals based on race, 
religion, national origin, etc. and as a result of a corporate take-over are also unfair.

Fair: decrease in work volume, reorganisation of production or work, liquidation or bankruptcy of business, unsuitability of employee for work, unsatisfactory performance, breach of 
duties, corruption, loss of trust, long term incapacity, employee has reached retirement age. In the case of redundancy, employer is required to offer another position to the employee if 
possible. The employer should also give preference when laying off workers to retaining employee representatives, workers with better results, those with occupational diseases or
injuries sustained while working for the employer, workers with the longest tenure, with dependents or those engaging in education or training to increase their productivity.

Fair: Dismissals are justified for “specific serious reasons”, including personal characteristics and urgent business needs. Dismissals for economic and personal reasons are valid only
if employees cannot be reasonably, in view of their skills and abilities, transferred or retrained. Unfair: Dismissals for an employee‟s illness, participation in a strike, union activities and 
political or religious views.

Fair: Dismissals for real and serious cause: for personal characteristics such as non-performance or lack of competence, or for economic reasons. In case of dismissal for economic
reasons, the employer must take account of certain criteria (such as social characteristics, family responsibilities, professional qualifications). The employee is given priority when 
rehiring in the year following dismissal.
Unfair: Dismissals without a real and serious cause. In case of employee illness or dismissals for economic reasons, the employer must attempt to find another position for the 
employee.
Null: Dismissals for reasons relating to the private life of the employee, based on discrimination or following harassment.

Germany

Fair: Dismissals based on factors inherent in the personal characteristics or behaviour of the employee (such as insufficient skill or capability), or business needs and compelling 
operational reasons.

Greece

Hungary

Ireland

Italy

Luxem-bourg

Nethe-rlands

Poland

Portugal

Unfair: Dismissals where the employee can be retained in another capacity within the same establishment or enterprise, and redundancy dismissals where due account has not been 
taken of “social considerations” (e.g. seniority, age, alimony). Rehabilitation must already have been attempted before the dismissal, or the dismissal is considered unfair.

The termination of an employment contracts according to Greek law is a unilateral, non-causative legal act, except for those cases stipulated otherwise by law (e.g. dismissal of 
employee representatives, recent mothers, or for reasons of pregnancy or discrimination). The definition of fair or unfair (abusive) dismissal is based on case law. Generally, dismissals
for non-performance of business needs are considered fair. In larger companies, dismissals have to be a "last resort" possibly only after exhaustion of oral and written warnings, pay
reductions and suspensions, and after consultation with employer representatives.

A regular employment contract may be lawfully terminated: (a) by mutual consent of the employer and employee; (b) by ordinary notice (e.g. for reasons in connection with the 
employer‟s operations); (c) by extraordinary notice (where the employee has seriously violated key obligations under the employment relationship deliberately or by serious
carelessness or otherwise acts in such a way that makes it impossible to sustain the employment relationship); or (d) with immediate effect during the trial period. A termination is
regarded as unfair/unlawful if it is not undertaken according to the cases mentioned above.

Fair: Dismissals for lack of ability, competence or qualifications, conduct, or redundancy. Unfair: Dismissals reflecting discrimination on grounds of race, religion, age, gender, etc., 
including when these factors bias selection during redundancies. Exercise or proposed exercise of rights under carer‟s leave, maternity leave, parental leave, adoption leave or
minimum wage legislation.

Fair: Termination of contract only possible for “just cause” or “just motive”, including significant non-performance of the employee, and compelling business reasons.
Unfair: Dismissals reflecting discrimination on grounds of race, religion, gender, trade union activity, etc.

Fair: Dismissal is fair if it is based on serious misconduct; worker capability; economic needs of the business. In assessing the conduct of the employee in unfair dismissal cases, 
judges take into account education, work histories, social status and elements affecting the employee's responsibility and consequences of dismissal.

Fair: Dismissals on grounds of employee conduct or unsuitability, and for economic redundancy. In the latter case, data on the financial state of the company and proof that alternatives
to redundancy have been considered must be given, and the selection of dismissed employees be justified (age/sex balance of the workforce, for example). Unfair: Unfair are “obviously
unreasonable” terminations, and dismissals of pregnant women, the disabled, new mothers and works council members.

1.5

Fair: Dismissals based on factors inherent in the employee (e.g. lack of competence) or on economic grounds of redundancy of the job.

Fair: Dismissals are permitted for economic grounds and for lack of professional or technical capability. Dismissals for individual redundancy must not involve posts also manned by
people on fixed-term contracts. Dismissals for lack of competence are only possible after introduction of new technology or change to job functions.
Unfair: Where the grounds for dismissal are irregular (where some of the formalities are not followed) or illegal (where the grounds for dismissal are declared unfounded by a judge or
which lack fundamental procedural aspects).

Slovak Republic Fair: An employer may only give notice for the reasons specified in the Labour Code (e.g. personal reasons: continual minor breaches of work discipline or unsatisfactory work results – 

redundancy, economic or organisational reasons).
Unfair: An employer cannot give notice for other reasons, such as discrimination, etc.

Slovenia

Fair: Cancellation is legitimate if there exists a justified reason for cancellation which prevents continued work under the conditions from the employment contract.
Unfair: Cancellation is not valid if it is: discriminatory, made owing to a threat or deception by the employer or for an unjustified reason. Unjustified reasons for regular cancellation are 
deemed to be: temporary absence from work due to illness or injury, parental leave or to care for family members; participating in legal proceedings against the employer; participation 
in union activities outside working hours; participation in union activities during working hours in agreement with the employer; participation in legal strike action; being a worker
representative; change of employer; discrimination based on race, nationality or ethnic origin, skin colour, gender, age, disability, marital status, family obligations, pregnancy, religious
and political beliefs, national or social background; taking part in military or civil service.

Spain

Fair: Dismissal based on objective grounds, including economic grounds, absenteeism, lack of adequacy for the job, lack of adaption to technological changes made in the enterprise 
after, if appropriate, a training course of three months, and lack of funding of public plans or programmes developed by the public administration or non-profit organisations.

Unfair dismissal: dismissals where none of the above-mentioned grounds is proven. Null and void: dismissals based on discrimination or carried out with violation of fundamental rights, 
as well as those based on situations derived from maternity (pregnancy, birth, feeding, childcare, etc.).

Sweden

Fair: Dismissals on “ objective grounds”, i.e. economic redundancy and personal circumstances, including lack of competence. In the case of lesser capability because of (e.g.) age, 
disease, etc., the employer has to try to adjust the workplace, rehabilitate the employee or transfer the employee to other suitable work. According to case law, it is only fair dismissal if 
the employee has a "permanent reduction of the working capacity which is so considerable that the employee no more can be expected to perform work of any significance with the 
employer". In cases of redundancy, selection of workers to be dismissed has to be justified (mainly based on last-in, first-out principle).
Unfair: Objective grounds are deemed not to exist if an employee could reasonably have been transferred to another work, or if dismissal is based on events that happened over two 
months ago.

United Kingdom

Fair: Dismissals relating to the capability, qualifications or conduct of the employee; because he/she is redundant; because continued employment would be illegal; or some other
“substantial reason”. One year tenure generally necessary for being able to file for unfair dismissal.
Unfair: Dismissals related to a range of reasons including trade union activity, health and safety whistle blowing, pregnancy or maternity, and the national minimum wage. No qualifying 
service required for complaints for these reasons

Source: OECD.

114

Score

1

0

0

0

2

2

2

2

0.5

0

0

0

1

0

2

0

2

2

2

0

Table II.A2.3: Trial period, 2008

Legal provisions

Austria
Belgium

Usually 1 month
Not legally required, but when introduced in the employment contract, minimum and maximum duration is
set by law. Blue collar workers: 7-14 days; white collar workers: 1-6 months (up to 12 months if annual salary
exceeds 34 261 EUR (2008) or 35 638 EUR (2009).

Czech Republic 3 months.

Denmark
Estonia
Finland
France

Germany
Greece
Hungary
Ireland

Italy

Blue collar: 9 months (based on collective agreements). White collar: 12 months.
A probationary period shall not exceed 4 months
4 months.
Contracts of indefinite duration can include trial periods of two months, (three months for supervisors and
technicians and four months for managers). The trial period can be renewed once by agreement to a 
maximum, including renewal, of four months (six months for supervisors and technicians and eight months
for managers).
6 months.
2 months.
Maximum 3 months.
All workers: 12 months (shorter trial periods are commonly agreed between employer and employee, but
claims under statutory unfair dismissal legislation are not normally possible until after the periods shown). 
The 12 month limit does not apply in certain dismissal situations e.g. pregnancy, exercise or contemplated
exercise of rights under maternity, adoptive, parental or carer‟s leave legislation, for trade union activity or
rights under minimum wage legislation.
Blue collar: 1-2 weeks (the trial periods cited are those common in collective agreements). White collar: 3-8
weeks.
The maximum length of the trial period for a contract of unlimited duration is 6 months.
All workers: 1 month for contract of < 2 years duration; 2 months for contract of >2 years duration.
All workers: Minimum 2 weeks. Ranging up to 3 months.
180 days for general workers (240 days for managers and senior officers/top executives).

Luxembourg
Netherlands
Poland
Portugal
Slovak Republic A probationary period for the maximum of three months may be agreed in writing in an employment

Slovenia

Spain

contract. A probationary period may not be prolonged.
Probation can last a maximum of six months. It can be extended in the event of temporary absence from
work. Unsuccessful completion of probation is a reason for extraordinary cancellation (without notice).

In accordance with provisions of collective agreements. If there is no provision on this matter, this period
may not be longer than six months for qualified experts, nine months for senior managers on indefinite
contracts or two months for other workers (three months in enterprises with less than 25 workers).

Sweden

All workers: Probationary period limited to a maximum of 6 months trial; does not exclude claim for 
damages. Deviation possible by collective agreement.

United Kingdom Trial periods are for agreement between employer and employee, but do not affect the employee‟s

statutory employment rights. Claims under unfair dismissal legislation are not normally possible until 1
year‟s service has been completed.

Source: OECD.

Part II

Thematic chapters

Length 
(mths)
1
3.3

3

10.5
4
4
4

6
2
3
12

0.8

6
2
1.8
3
3

6

2.5

3

12

115

European Commission

Labour Market Developments in Europe, 2012

Table II.A2.4: Compensation pay and related provisions following unjustified dismissal, 2008

Austria

Belgium

Czech 
Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Luxem-
bourg

Nethe-
rlands

Poland

Portugal

Slovak
Republic

Slovenia

Spain

Sweden

United 
Kingdom

The employee has the right to choose between reinstatement and compensation, although this option is rarely taken up by employees. In the event of socially
unjustified dismissal, the employee is entitled to compensation equal to earnings between the dismissal and the legal settlement of the case. Sums earned by
the employee in the interim are set off against the award.

No right to reinstatement. Compensation at least equal to the notice period (in the event that notice was not given).
White collar: additional compensation for damages as determined by a judge.
Blue collar: additional compensation for damages corresponding to six months‟ wages.

Reinstatement is always available to the employee. Unfair dismissal gives rise to a right to reinstatement. If reinstatement is not accepted by both parties, 
compensation is through severance pay and award of lost earnings during the court case (up to 6 months). Sums earned by the employee in the interim are set 
off against the award. There is no maximum amount for compensation.

Reinstatement orders are possible but rare (the possibility of reinstatement was introduced in the Main Agreement in 1981 - blue collar workers - but until now
there have been only a few decisions in which a tribunal decided that the dismissed employee should be reinstated - Section 61 of the Labour code). For blue 
collar workers, compensation is limited to 52 weeks of pay for long service cases. Average is 10.5 weeks according to Danish Confederation of Trade Unions. 
For white collar workers, compensation depends on age and seniority with the firm and is increasing in both (maximum is 6 months for older than 30 with more 
than 15 years tenure).
If termination of an employment contract is declared unlawful, an employee has the right to reclaim his or her former job or position. In such a case, a labour
dispute resolution body shall make a decision on reinstatement of the employee in his or her former job or position. Compensation up to six months wages, 
subject to the circumstances of the employment contract and the nature of the offence upon termination of the employment contract.

No reinstatement. Compensation between 3 and 24 months. The following factors must be taken into account when determining the amount of compensation: 
estimated time without employment, estimated loss of earnings, duration of the employment relationship, and degree of guilt found on the side of employer. The 
highest compensations are used only in cases of gross injustice.
The option of reinstatement is available to the employee in cases of discriminatory dismissal only. Compensation in addition to regular severance pay of six
months minimum (generally 12-24 months, can be more) for employees with at least two years of tenure and working in enterprises with more than 11 
employees. For employees with less than two years of service and/or working in a firm with fewer than 11 workers, the judge an order compensation according 
to the loss suffered, but without any minimum.

Reinstatement is possible, although rarely taken up by the employee concerned. Compensation of up to 12 months, depending on length of service (15 months if 
aged under 50 and tenure >15 years, 18 months if aged over 55 and tenure >20). Compensation must be requested by employee or employer during court 
action; continuation of employment must be unreasonable for one of the parties. In some cases, additional liability for wages from the expiry date of the notice to 
the conclusion of the court hearing.

Frequent reinstatement orders, accompanied by indemnity for the period of time between notice of termination and court ruling. No reinstatement, if severance 
pay has been requested. Compensation through regular severance pay, plus a sum equal to earnings between the dismissal and the legal settlement of the 
case. According to case law, any dismissal not justified by the employer's legitimate business interests is deemed to constitute unfair dismissal and is rendered 
null and void. The consequence of nullity in cases of unfair dismissal is that the contract of employment is deemed to have continued to exist without interruption 
(hence, no legal imposition of reinstatement is necessary) and the employer is obliged to pay the employee the remuneration due for the whole of the intervening 
period since the date of the nullified termination.
If a court of law declares that the employment was illegally terminated, the employee shall be reinstated to the original position if he/she requests. At the 
employer‟s request, the court may refrain from reinstating the employee to the original position provided that the employer pays compensation. In lieu of 
reinstatement, the court shall order (upon weighing all circumstances, in particular the unlawful action and its consequences) the employer to pay no less than 
two and no more than twelve months‟ average earnings to the employee.

A reinstatement order, with back pay from the date of dismissal, is possible. Also re-engagement from date after date of dismissal with no back pay from date of 
dismissal also possible. Deciding body must specify why re-instatement/re-engagement not applied if compensation awarded. In 2007, reinstatement was
ordered in one case and re-engagement was ordered in four cases. Maximum compensation equals 104 weeks‟ pay. Compensation awards based on financial
loss. Maximum 4 weeks‟ award where no loss established. (Average Employment Appeals Tribunal award in 2007 was 7280 EUR.)

The option of reinstatement is fairly often made available to the employee. Workers in companies employing >15 employees in an establishment or in the same 
municipality or in companies with more than 60 employees (even if distributed in production units or municipalities with less than 15 employees) can choose 
reinstatement or financial compensation of 15 months‟ (plus at least 5 months‟ compensation for the period between dismissal and court decision in both 
cases). For establishments not included in the above cases, the employer can choose between re-employment (different from reinstatement because it does not 
give rise to compensation for the period between dismissal and the court decision) and compensation of 2.5-6 months (depending on seniority and firm size). 
This can be increased up to 10 months > 10 years, and 14 months >20 years seniority.

When ruling on unfair dismissal, judges may request that the employee is reinstated. If the employer does not want to reinstate the employee, the employer can 
pay additional compensation of one months‟ salary. If the dismissal is found to be unfair, the employer may be required to pay damages to the employee. In 
determining the amount of damages, the court will consider a period which should have been sufficient for the employee to find a new job (typically 4-6 months). 
The dismissed employee must demonstrate that he/she has taken necessary steps to find a new job. The court also takes into account various factors such as
seniority, age and family situation.

The option of reinstatement is rarely made available to the employee. Termination via PES: The employee can file a claim at the court for unfair dismissal. If the 
court comes to the conclusion that the dismissal was unfair it usually grants financial compensation according to the same formula for severance pay minus the 
salary paid during the processing time of the CWI and during the notice period. Termination via court: If the court thinks that termination is unfair, but upholds the 
contract as not feasible, then the correction factor will be more than one. Recent research documents the average compensation for dissolving a contract is
equivalent to about seven months‟ pay.

Reinstatement is possible, but not often made available by the court. Compensation of up to 3 months‟ wages depending on amount of salary earned in another 
job by the time of court decision.

Irregular dismissal: no reinstatement available. No back pay, no reinstatement, only right to compensation of 7.5-22.5 days of pay per year of service (typically up 
to 15 days per year of service). Illegal dismissal: The option of reinstatement is made available to the employee, although the employer may, in companies with 
up to nine workers, or in the case of directors or workers in management positions, submit a request to the court to oppose reinstatement. Back pay limited to 
one year (where court takes longer to rule on the issue, the State bears costs), and choice between reinstatement and compensation, typically of one months‟ 
pay per year of service (minimum payment of 3 months).

In the event that an employer gave an invalid notice to an employee and the employee notified the employer that he insists on further employment, his
employment relationship does not terminate, except in the case when a court decides that the employer cannot be fairly required to further continue employing 
the employee. Compulsory compensation for unfair dismissal equal to 12 monthly wages. If an employer does not allow the employee to work or if a law suit in 
respect of unfair dismissal takes longer than 12 months, further compensation is to be determined by the courts.

If the courts determines that the employer's cancellation is not legitimate, but the worker does not wish to continue the employment, it may, on the proposal of 
the worker: determine the duration of the employment; grant a period of tenure and other rights from the employment relationship; and award appropriate 
monetary compensation. If the court determines that the continuation of the employment is no longer possible, it may still adopt the same decision, irrespective 
of the worker's proposal. If there is no reinstatement, the court may grant the worker tenure and other rights from the employment relationship and appropriate 
monetary compensation up to a maximum amount of 18 months of average wages paid in the last three months prior to dismissal.

In the case of unfair dismissal, the employer can choose between reinstatement with back pay (the wages for the period going from the dismissal to the final
decision by the courts, if that stage is reached) and compensation with back pay (45 days wages per year of seniority with a maximum of 42 months wages) with 
back pay. Where the dismissed employee is a legal representative of the workers or a union delegate, the employee can choose between reinstatement and 
compensation. If the dismissal was discriminatory, the worker should always be reinstated. For new permanent contracts after 1997 (aimed at young and 
disadvantaged workers: 16-28, over 45, fixed-term employees, long-term unemployed, women where they are under-represented) compensation is fixed in 33 
days per year of service, with a maximum of 24 months pay.

Courts may order reinstatement or damages, plus a sum equal to earnings between the dismissal and the legal settlement of the case. The option of 
reinstatement is rarely made available to the employee. If employer refuses to comply with reinstatement, damages are payable on the scale: 16 months <5 
years; 24 months <10 years; 32 months >10 years.

Employers are not obliged to reinstate but if a tribunal orders reinstatement or re-engagement in a comparable job and the employer refuses to comply, the 
tribunal may make an additional award on top of the basic and compensatory awards. Compensation may consist of various elements: basic award (up to 7 800 
GBP); compensatory award (up to 53 500 GBP); and additional awards (up to 13 520 GBP). Unlimited, if the dismissal is connected with health and safety
matters or whistle blowing. Compensation under discrimination legislation is also unlimited.

Source: OECD.

Typical
compensation 
at 20 years tenure 
(months)
6

14

8

9

6

14

16

18

6

10

24

15

5

7

3

15

12

18

22

32

8

Extent of 
reinstatement 
(scale 0-3)

3

0

3

1

3

0

0

1.5

2

2

1

2

3

1

1

2

2.5

2

0

1

1

116

Part II

Thematic chapters

Table II.A2.5: Effects of EPL on labour market performance: evidence from existing literature

Author(s)

Sample

Effects of EPL

Belot and van Ours (2004)

17 OECD countries, 1960-1999

Insignificant effect on the unemployment rate

Blanchard and Portugal  (2001) 19 OECD countries, 1985-1994

Positive effect on unemployment duration

Negative effect on flows into unemployment

Insignificant effect on unemployment

Blanchard and Wolfers (2000)

20 OECD countries, 1960-1995

Positive effect on unemployment

Boeri (2011)

All OECD countries, 2008

Positive correlation with share of temporary
employment

Elmeskov, Martin and Scarpetta 
(1998)
Garibaldi, Konings and 
Pissarides (1997)
Gomez-Salvador, Messina and 
Vallanti  (2004)

19 OECD countries, 1983-1995

Positive effect on unemployment

10 OECD countries

Negative correlation with job reallocation

13 EU countries, 1992-2001

Negative effect on job flows

Grubb and Wells (1993)

11 EU countries, 1989

EPL for regular workers increases temporary work

Heckman and Pagés (2000)

43 countries

No significant effect on aggregate unemployment

Positive effect on female and youth unemployment

Lazear (1990)

22 countries, 1956-1984

Positive effect of severance pay on unemployment

Nickell and Layard (1999)
Nickell, Nunziata and Ochel
(2005)

20 countries, 1983-88 and 1989-94

Insignificant effect on unemployment

20 OECD countries, 1961-1995

Positive effect on unemployment persistence

OECD (1999)

19 OECD countries, 1985-1997

Insignificant effect on unemployment
Negative effect on prime-age male unemployment
rate
Positive effect on share of self-employment

Negative effect on flows into unemployment

OECD (2004)

19 OECD countries, 1985-2002

Negative effect on flows out unemployment

Positive effect on long-term unemployment

Source:

117

Statistical annex 

 
 
 
ANNEX 1

Labour market data

Belgium

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

120

10614
7008
66.0
4701
2595
2106
67.1
33.9
85.3
35.9
67.5
63.3
73.6
36.1
92.5
44.4
60.4
31.6
78.0
27.5
62.0
27.5
79.7
34.4
40.5
65.9
83.6
57.2
4.9
68.7
29.9
87.0
42.9
55.3
25.0
72.3
26.0
4348.1
1.7
2.7
2.1
3.5
13.1
9.2
3.9
8.6
6.8
10.8
21.9
7.1
40.5
7.5
18.8
6.8
4.2
13.0
7.6
3.8
6.8
15.5
6.7
8.5
50.4
41.1
41.9
39.4

:
3.6
2.1
:

3.4
1.0
2.2
4.6
1.2

10708
7073
66.1
4747
2609
2138
67.1
33.4
85.7
36.1
67.4
64.3
73.3
36.0
92.3
44.5
60.8
30.8
79.0
27.9
62.4
27.4
80.5
34.5
39.7
67.0
83.0
57.4
5.0
68.6
29.7
87.0
42.8
56.2
25.0
73.8
26.3
4413.7
1.8
1.5
0.7
2.5
12.7
8.9
3.8
8.3
6.6
10.2
22.4
7.5
40.8
7.0
18.0
6.3
4.4
12.5
7.0
3.6
6.3
14.2
6.5
7.6
47.5
40.8
41.7
39.0

-2.1
2.6
2.5
-0.1

3.6
1.4
3.5
5.4
-0.8

10796
7126
66.0
4769
2609
2159
66.9
32.4
85.6
37.2
67.3
63.1
72.8
34.9
91.8
45.2
60.9
29.9
79.2
29.3
61.6
25.3
79.8
35.2
38.6
65.4
81.9
56.6
5.0
67.2
27.4
85.7
42.9
56.0
23.2
73.8
27.7
4389.4
-0.2
-0.6
-1.4
0.5
13.2
9.2
4.0
8.2
6.5
10.2
23.2
8.2
41.4
7.9
21.9
7.1
5.1
13.7
8.1
4.5
7.1
16.2
7.8
8.1
44.2
40.8
41.7
39.2

-2.9
0.7
-0.3
-4.8

1.2
-0.1
3.9
0.2
-2.6

10892
7177
65.9
4856
2649
2207
67.7
32.5
86.3
39.2
67.9
65.1
73.4
35.2
92.2
47.6
61.8
29.8
80.4
30.9
62.0
25.2
80.0
37.3
39.1
65.7
81.9
56.7
5.3
67.4
27.3
85.5
45.6
56.5
23.1
74.4
29.2
4450.6
0.7
1.4
1.1
1.7
13.0
9.0
4.0
8.1
6.7
9.6
23.7
8.4
42.1
8.3
22.4
7.6
4.6
15.4
8.2
4.5
7.5
16.4
8.1
8.5
48.8
41.2
42.1
39.5

-4.8
0.7
1.3
-3.6

1.4
-0.4
3.3
1.9
1.7

10989
7220
65.7
4817
2623
2194
66.7
32.0
84.7
40.3
67.2
62.9
72.3
34.1
90.7
47.8
61.1
29.8
78.7
33.0
61.9
26.0
79.3
38.7
38.4
65.6
82.0
56.4
5.6
67.1
27.7
84.9
46.0
56.7
24.2
73.8
31.6
4470.5
1.4
0.4
0.1
0.9
12.8
9.0
3.8
8.9
7.7
10.3
24.7
9.2
43.3
7.2
18.7
6.6
4.0
14.1
6.8
3.8
6.3
15.6
7.1
7.2
48.4
41.4
42.4
39.4

-4.2
2.0
:
-0.5

3.1
1.1
2.8
4.7
0.4

2010-2011
0.9 %
0.6 %
-0.2 pps
-0.8 %
-1.0 %
-0.6 %
-0.9 pps
-0.5 pps
-1.6 pps
1.2 pps
-0.8 pps
-2.2 pps
-1.2 pps
-1.1 pps
-1.5 pps
0.2 pps
-0.7 pps
0.0 pps
-1.7 pps
2.1 pps
-0.1 pps
0.8 pps
-0.7 pps
1.4 pps
-0.7 pps
-0.1 pps
0.1 pps
-0.3 pps
0.3 pps
-0.3 pps
0.4 pps
-0.7 pps
0.4 pps
0.2 pps
1.1 pps
-0.6 pps
2.3 pps
0.4 %
0.7 pps
-0.9 pps
-1.0 pps
-0.8 pps
-0.2 pps
-0.1 pps
-0.1 pps
0.8 pps
1.0 pps
0.7 pps
1.0 pps
0.8 pps
1.2 pps
-1.1 pps
-3.7 pps
-1.0 pps
-0.6 pps
-1.3 pps
-1.4 pps
-0.7 pps
-1.2 pps
-0.8 pps
-1.0 pps
-1.3 pps
-0.4 pps
0.5 %
0.7 %
-0.3 %

0.6 pps
1.3 pps
: pps
3.1 pps

1.7 pps
1.5 pps
-0.5 pps
2.8 pps
-1.3 pps

Bulgaria

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

7673
5198
67.7
3448
1820
1628
66.3
28.9
84.5
45.7
66.3
0.0
70.6
31.7
87.5
55.3
62.1
26.0
81.4
37.2
61.7
24.5
79.4
42.6
30.6
70.6
84.6
61.6
0.0
66.0
27.1
82.5
51.8
57.6
21.8
76.2
34.5
3208.8
3.2
4.5
4.6
4.3
10.9
7.3
3.6
5.1
4.8
5.4
1.5
1.1
1.9
6.9
15.1
6.1
6.8
18.0
5.8
2.4
6.9
:
6.5
7.4
58.9
41.4
41.9
40.9

:
17.7
3.3
:

12.7
3.2
17.9
20.7
3.2

7640
5169
67.7
3505
1859
1646
67.8
30.1
85.5
48.7
67.8
0.0
72.5
34.0
88.8
58.7
63.1
26.1
82.1
40.2
64.0
26.3
81.3
46.0
32.9
72.7
86.1
63.9
0.0
68.5
29.3
84.7
55.8
59.5
23.1
77.9
37.7
3306.2
2.6
3.0
3.2
2.8
10.9
7.2
3.8
4.9
5.5
4.3
2.0
1.6
2.4
5.6
12.7
4.8
5.5
14.9
4.5
2.3
5.7
:
5.5
5.8
51.6
41.4
41.8
40.9

1.9
18.4
5.3
:

16.3
7.3
19.7
16.2
3.5

7607
5122
67.3
3442
1828
1614
67.2
29.5
84.3
49.2
67.2
0.0
72.0
34.0
88.0
57.4
62.5
24.8
80.6
42.1
62.6
24.8
79.2
46.1
32.3
70.0
85.5
62.5
0.0
66.9
28.0
82.7
54.1
58.3
21.4
75.8
39.2
3204.8
-2.6
-3.1
-3.2
-2.9
11.2
7.4
3.8
4.6
5.1
4.1
2.1
1.8
2.5
6.8
16.2
6.0
6.3
15.8
6.2
2.9
6.9
:
6.9
6.7
43.1
40.7
41.0
40.3

-0.9
-8.9
0.7
:

9.4
4.9
13.4
8.3
-2.9

7564
5046
66.7
3356
1775
1582
66.5
28.9
83.4
47.9
66.5
0.0
70.8
33.4
86.3
55.7
62.3
24.2
80.5
41.3
59.7
22.2
75.7
43.5
28.5
66.0
83.3
59.6
0.0
63.0
25.4
77.9
50.3
56.4
18.9
73.6
37.7
3010.4
-4.7
-6.1
-7.0
-5.0
11.5
7.4
4.1
4.4
5.0
3.9
2.2
2.0
2.4
10.3
23.2
9.2
9.3
23.1
9.7
4.5
10.3
:
10.8
9.6
46.4
40.9
41.1
40.6

-3.7
-17.7
-0.6
:

11.2
8.2
9.1
7.4
5.3

7505
4970
66.2
3279
1723
1556
66.0
27.4
82.4
48.3
66.0
0.0
69.6
31.5
84.6
55.3
62.4
23.0
80.2
42.4
58.5
20.1
74.0
43.9
26.6
64.5
82.1
58.5
0.0
60.9
22.8
75.0
49.9
56.2
17.2
73.0
38.8
2908.3
-4.2
-3.4
-4.5
-2.2
10.9
7.0
3.9
4.1
4.5
3.7
2.2
2.0
2.4
11.3
26.6
10.3
9.1
27.1
10.4
5.0
11.3
:
12.3
10.1
56.1
40.6
40.8
40.4

-3.7
-9.2
:
:

7.3
2.2
10.6
1.9
6.1

Statistical annex

Labour market data

2010-2011
-0.8 %
-1.5 %
-0.5 pps
-2.3 %
-2.9 %
-1.6 %
-0.5 pps
-1.6 pps
-0.9 pps
0.4 pps
-0.5 pps
0.0 pps
-1.2 pps
-1.9 pps
-1.6 pps
-0.4 pps
0.1 pps
-1.2 pps
-0.3 pps
1.1 pps
-1.1 pps
-2.1 pps
-1.7 pps
0.4 pps
-1.9 pps
-1.6 pps
-1.2 pps
-1.1 pps
0.0 pps
-2.1 pps
-2.5 pps
-2.9 pps
-0.4 pps
-0.2 pps
-1.7 pps
-0.6 pps
1.1 pps
-3.4 %
0.5 pps
2.7 pps
2.5 pps
2.8 pps
-0.6 pps
-0.3 pps
-0.3 pps
-0.3 pps
-0.5 pps
-0.2 pps
0.0 pps
0.0 pps
0.0 pps
1.0 pps
3.4 pps
1.1 pps
-0.2 pps
4.0 pps
0.7 pps
0.5 pps
1.0 pps
: pps
1.5 pps
0.5 pps
9.7 pps
-0.7 %
-0.7 %
-0.5 %

0.0 pps
8.5 pps
: pps
: pps

-3.9 pps
-6.0 pps
1.5 pps
-5.5 pps
0.8 pps

121

European Commission

Labour Market Developments in Europe, 2012

Czech Republic

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

122

10320
7347
71.2
5132
2888
2244
69.9
31.9
87.8
48.2
69.7
81.5
78.1
36.7
95.0
62.5
61.5
26.9
80.3
35.2
66.1
28.5
83.5
46.0
24.2
72.6
84.0
65.4
0.7
74.8
32.8
91.7
59.6
57.3
23.9
74.9
33.5
4855.9
2.1
1.8
2.2
1.3
15.4
11.3
4.0
7.8
6.5
9.4
4.4
1.7
7.9
5.3
10.7
4.8
4.6
20.4
4.7
1.7
5.4
5.6
4.2
6.7
52.3
42.3
43.6
40.4

:
4.3
3.3
:

6.3
2.8
8.3
8.3
3.5

10422
7410
71.1
5163
2922
2241
69.7
31.1
87.3
49.5
69.6
77.0
78.1
35.9
94.8
64.2
61.0
26.1
79.6
36.1
66.6
28.1
83.8
47.6
24.1
73.1
83.2
65.8
0.8
75.4
32.4
92.1
61.9
57.6
23.5
75.2
34.4
4933.5
2.3
1.6
2.0
1.1
15.2
11.2
4.0
7.2
5.7
9.1
4.3
1.6
7.8
4.4
9.9
4.0
3.9
19.4
3.7
1.7
4.4
3.7
3.5
5.6
49.3
42.3
43.6
40.3

2.2
3.6
3.0
1.1

4.2
2.2
6.6
7.5
0.8

10499
7431
70.8
5209
2952
2257
70.1
31.8
87.7
49.6
70.0
77.4
78.5
37.3
95.1
63.1
61.5
26.1
79.9
37.2
65.4
26.5
82.5
46.8
22.8
71.3
82.0
64.4
1.0
73.8
31.1
90.5
59.6
56.7
21.7
74.1
35.0
4857.2
-1.2
-1.5
-1.5
-1.6
15.9
11.5
4.3
7.5
6.1
9.3
4.8
2.0
8.5
6.7
16.6
6.0
5.7
24.4
6.2
2.5
6.8
5.8
5.8
7.7
30.1
41.6
42.9
39.8

-2.4
4.2
1.6
-9.5

-1.2
-3.1
5.1
-2.1
-3.5

10522
7400
70.3
5192
2943
2249
70.2
30.9
87.8
49.7
70.1
78.1
78.6
36.2
95.5
62.4
61.5
25.3
79.8
38.0
65.0
25.2
82.2
46.5
22.0
70.4
81.0
64.0
1.0
73.5
29.6
90.5
58.4
56.3
20.6
73.4
35.5
4809.6
-1.7
-1.0
-0.9
-1.1
16.8
12.1
4.7
8.2
6.8
9.8
5.1
2.2
9.1
7.3
18.3
6.4
6.5
25.3
7.0
2.8
7.4
4.6
6.4
8.4
41.0
41.6
42.8
39.9

-9.8
-2.1
-0.7
-1.3

3.7
5.6
2.6
-0.4
4.5

10546
7345
69.6
5180
2922
2258
70.5
30.1
88.0
50.6
70.4
77.1
78.7
35.6
95.3
62.6
62.2
24.2
80.4
39.4
65.7
24.7
82.8
47.6
21.4
71.0
81.0
64.7
1.0
74.0
29.2
90.9
58.9
57.2
19.9
74.3
37.2
4827.8
0.3
0.4
-0.1
1.0
17.2
12.2
5.0
8.0
6.7
9.5
4.7
1.8
8.5
6.7
18.0
5.9
5.8
24.7
6.5
2.9
6.8
5.7
5.8
7.9
40.6
41.4
42.6
39.6

-2.8
-3.6
:
0.9

1.6
2.3
3.6
1.1
1.4

2010-2011
0.2 %
-0.7 %
-0.7 pps
-0.2 %
-0.7 %
0.4 %
0.4 pps
-0.8 pps
0.2 pps
0.8 pps
0.4 pps
-1.1 pps
0.1 pps
-0.6 pps
-0.2 pps
0.2 pps
0.7 pps
-1.1 pps
0.6 pps
1.5 pps
0.7 pps
-0.6 pps
0.6 pps
1.1 pps
-0.6 pps
0.6 pps
0.0 pps
0.7 pps
0.0 pps
0.5 pps
-0.4 pps
0.3 pps
0.5 pps
1.0 pps
-0.7 pps
0.9 pps
1.7 pps
0.4 %
2.0 pps
1.4 pps
0.8 pps
2.1 pps
0.4 pps
0.0 pps
0.4 pps
-0.2 pps
-0.1 pps
-0.3 pps
-0.4 pps
-0.4 pps
-0.6 pps
-0.6 pps
-0.3 pps
-0.5 pps
-0.7 pps
-0.6 pps
-0.5 pps
0.1 pps
-0.6 pps
1.1 pps
-0.6 pps
-0.5 pps
-0.4 pps
-0.5 %
-0.5 %
-0.8 %

7.0 pps
-1.5 pps
: pps
2.2 pps

-2.2 pps
-3.2 pps
1.0 pps
1.5 pps
-3.1 pps

Denmark

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

5438
3582
65.9
2869
1513
1356
80.1
70.6
88.9
61.0
80.9
66.8
83.7
72.0
92.3
66.9
76.4
69.1
85.3
55.1
77.0
65.3
86.1
58.9
64.5
81.5
87.1
73.3
3.6
80.8
66.5
89.8
64.9
73.2
64.0
82.3
52.9
2758.7
2.8
-0.1
-0.3
0.1
8.0
6.0
2.1
9.0
7.7
10.3
23.0
12.4
35.1
3.8
7.5
3.2
3.4
5.7
3.0
3.0
3.5
9.2
3.4
4.2
16.1
39.3
40.5
37.2

:
4.3
2.9
:

3.6
1.3
3.4
6.5
-1.1

5485
3605
65.7
2908
1533
1374
80.7
72.2
89.9
59.9
81.3
70.3
84.3
72.8
93.3
66.8
77.0
71.5
86.4
53.0
77.9
66.4
87.5
58.4
65.8
81.7
88.4
74.1
3.7
81.6
67.4
91.0
65.2
74.1
65.3
84.0
51.5
2806.7
1.7
1.7
1.6
1.8
8.0
6.0
2.0
8.5
7.6
9.4
23.8
13.3
35.6
3.4
8.0
2.7
2.6
5.5
2.8
2.3
3.2
8.7
3.2
3.7
13.5
39.1
40.4
37.1

0.0
1.0
2.9
1.9

3.5
-0.7
3.7
5.8
-2.4

5517
3616
65.5
2901
1524
1377
80.2
70.9
89.4
60.7
80.6
74.6
83.6
71.7
92.2
68.1
76.8
70.0
86.5
53.5
75.3
62.5
84.7
58.2
62.3
78.7
86.7
71.4
4.0
78.0
62.2
86.9
64.8
72.7
62.8
82.5
51.7
2724.1
-2.4
-2.9
-4.2
-1.5
8.6
6.3
2.3
8.7
7.8
9.6
25.2
14.3
37.2
6.0
11.8
5.4
4.1
9.3
5.6
3.7
5.8
11.8
6.6
5.3
9.5
39.1
40.3
37.3

1.4
-10.3
-3.1
-10.0

1.8
0.8
2.8
-0.4
-3.5

5542
3619
65.3
2872
1507
1365
79.4
67.5
88.7
61.8
79.8
72.8
82.6
67.5
92.0
67.8
76.0
67.4
85.3
55.9
73.3
58.1
82.8
58.4
58.6
77.6
85.4
69.4
4.0
75.6
56.7
85.3
63.3
71.1
59.5
80.3
53.7
2654.0
-2.3
-2.6
-3.0
-2.1
8.4
6.0
2.4
8.5
8.1
8.8
25.6
14.0
38.1
7.5
14.0
6.7
5.5
11.3
6.9
4.8
7.1
15.0
8.4
6.5
20.2
39.5
40.8
37.6

-2.7
-6.3
-2.9
-7.3

2.7
-1.2
3.1
-0.7
3.6

5566
3613
64.9
2864
1498
1366
79.3
67.1
88.2
63.2
79.8
72.5
82.3
67.1
91.5
68.3
76.1
67.1
84.7
58.0
73.1
57.5
82.3
59.6
57.7
77.4
85.5
68.8
4.4
75.9
56.6
85.7
63.8
70.4
58.5
78.9
55.3
2643.1
-0.4
-0.4
0.2
-1.1
8.4
6.1
2.3
8.9
8.3
9.4
25.1
14.2
37.0
7.6
14.2
6.8
5.7
11.6
6.8
5.3
7.1
16.5
7.7
7.5
24.4
39.8
41.1
37.8

-1.4
0.0
:
-0.9

1.6
0.8
2.8
1.3
1.2

Statistical annex

Labour market data

2010-2011
0.4 %
-0.1 %
-0.4 pps
-0.3 %
-0.5 %
0.0 %
-0.1 pps
-0.4 pps
-0.5 pps
1.4 pps
0.0 pps
-0.3 pps
-0.3 pps
-0.4 pps
-0.5 pps
0.5 pps
0.1 pps
-0.3 pps
-0.5 pps
2.2 pps
-0.2 pps
-0.5 pps
-0.5 pps
1.1 pps
-0.9 pps
-0.2 pps
0.1 pps
-0.6 pps
0.4 pps
0.3 pps
-0.1 pps
0.4 pps
0.5 pps
-0.7 pps
-1.0 pps
-1.4 pps
1.6 pps
-0.4 %
1.9 pps
2.2 pps
3.2 pps
1.0 pps
0.0 pps
0.0 pps
-0.1 pps
0.4 pps
0.2 pps
0.6 pps
-0.5 pps
0.2 pps
-1.1 pps
0.1 pps
0.2 pps
0.1 pps
0.2 pps
0.3 pps
-0.1 pps
0.5 pps
0.0 pps
1.5 pps
-0.7 pps
1.0 pps
4.2 pps
0.8 %
0.7 %
0.5 %

1.3 pps
6.3 pps
: pps
6.4 pps

-1.0 pps
2.0 pps
-0.3 pps
2.0 pps
-2.4 pps

123

European Commission

Labour Market Developments in Europe, 2012

Germany

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

124

81363
54229
66.7
40992
22313
18679
75.6
51.5
87.2
57.2
76.7
66.8
81.7
54.0
93.8
65.8
69.4
49.0
80.6
48.9
69.0
45.4
80.3
51.3
44.8
73.1
85.3
63.0
5.8
74.7
47.2
86.4
59.4
63.2
43.5
74.0
43.4
37397.2
1.7
2.1
1.9
2.3
10.5
7.2
3.3
14.7
14.7
14.7
25.4
8.5
45.6
8.7
11.9
7.9
10.3
17.3
8.3
3.9
8.0
16.3
8.6
8.8
56.6
42.3
43.2
40.4

:
1.6
1.8
:

0.8
-0.8
0.9
3.2
1.5

81265
54066
66.5
41032
22313
18719
75.9
52.2
87.0
58.7
77.0
66.8
82.0
54.7
93.5
67.2
69.7
49.5
80.5
50.5
70.1
46.6
80.9
53.7
45.6
74.0
85.7
64.0
6.0
75.8
48.7
87.1
61.7
64.3
44.5
74.7
46.0
37902.3
1.2
1.4
1.2
1.5
10.3
7.0
3.2
14.8
14.7
14.8
25.1
8.3
45.2
7.5
10.6
7.0
8.5
15.6
7.3
3.4
6.9
14.2
7.4
7.7
52.5
42.1
43.0
40.4

0.8
-0.6
1.3
2.1

2.1
1.3
2.4
3.8
-0.1

80967
53763
66.4
41030
22232
18798
76.3
51.8
87.1
61.0
77.4
67.5
82.2
54.3
93.2
69.3
70.4
49.2
81.0
52.9
70.3
46.0
80.8
56.1
45.3
73.9
86.3
64.1
6.2
75.4
47.5
86.1
63.8
65.2
44.4
75.4
48.6
37807.8
0.1
-0.2
-1.1
0.8
10.5
7.1
3.3
14.6
14.4
14.8
25.3
8.6
44.9
7.8
11.2
7.3
8.0
15.9
7.7
3.4
7.1
14.9
8.1
7.3
45.5
41.4
42.2
39.8

0.3
0.4
-0.1
-2.7

0.2
-1.1
2.1
0.1
-5.2

80760
53546
66.3
41015
22175
18839
76.6
51.3
87.3
62.5
77.7
67.5
82.3
53.7
93.1
70.8
70.8
48.9
81.3
54.5
71.1
46.2
81.5
57.7
45.4
74.7
86.7
64.9
6.2
76.0
47.9
86.5
65.0
66.1
44.6
76.3
50.5
38072.7
0.6
0.7
0.4
1.1
10.5
7.1
3.4
14.7
14.5
15.0
25.5
8.7
45.0
7.1
9.9
6.7
7.7
15.1
7.0
3.2
6.5
13.8
7.5
6.6
47.4
41.7
42.5
40.0

-0.9
1.2
1.1
-1.7

2.4
1.4
0.6
2.9
3.6

80806
53730
66.5
41474
22329
19145
77.2
52.5
87.7
64.0
78.3
68.4
82.5
54.8
93.1
71.7
71.8
50.0
82.1
56.7
72.5
47.9
82.8
59.9
46.5
75.8
87.6
66.0
6.6
77.3
49.7
87.7
67.0
67.7
46.1
77.8
53.0
38979.3
1.4
2.4
2.2
2.6
10.5
7.1
3.4
14.8
14.6
14.9
25.7
9.0
45.1
5.9
8.6
5.5
6.5
13.4
5.8
2.5
5.5
11.3
6.2
5.6
48.0
41.8
42.7
40.1

0.6
1.7
:
1.9

3.0
2.2
3.4
4.8
1.6

2010-2011
0.1 %
0.3 %
0.2 pps
1.1 %
0.7 %
1.6 %
0.6 pps
1.1 pps
0.4 pps
1.6 pps
0.6 pps
0.9 pps
0.2 pps
1.1 pps
0.0 pps
0.9 pps
1.0 pps
1.2 pps
0.8 pps
2.2 pps
1.4 pps
1.7 pps
1.4 pps
2.2 pps
1.0 pps
1.1 pps
0.9 pps
1.1 pps
0.3 pps
1.3 pps
1.8 pps
1.2 pps
1.9 pps
1.6 pps
1.6 pps
1.5 pps
2.5 pps
2.4 %
0.8 pps
1.7 pps
1.8 pps
1.6 pps
0.0 pps
0.0 pps
0.0 pps
0.1 pps
0.1 pps
-0.1 pps
0.2 pps
0.3 pps
0.1 pps
-1.2 pps
-1.3 pps
-1.2 pps
-1.2 pps
-1.7 pps
-1.2 pps
-0.7 pps
-1.0 pps
-2.5 pps
-1.3 pps
-1.0 pps
0.6 pps
0.2 %
0.5 %
0.2 %

1.5 pps
0.5 pps
: pps
3.6 pps

0.6 pps
0.8 pps
2.8 pps
1.9 pps
-2.0 pps

Estonia

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

1338
909
68.0
663
338
325
72.9
38.3
88.5
62.1
72.2
76.3
77.5
44.2
93.6
63.7
68.7
32.3
83.7
61.0
69.4
34.5
84.8
60.0
33.1
74.4
86.8
57.9
11.5
73.2
38.8
89.7
59.4
65.9
30.0
80.1
60.4
630.7
0.8
1.5
2.7
0.4
8.7
6.2
2.5
2.2
2.8
:
7.2
3.8
10.6
4.7
10.0
4.3
0.0
11.7
4.9
0.0
4.0
8.5
5.4
3.9
49.2
41.3
41.9
40.6

:
27.6
-1.4
:

25.0
12.0
20.0
24.3
6.6

1336
907
67.9
671
340
331
74.0
41.4
88.1
65.1
73.0
79.0
78.3
45.3
92.9
68.8
70.1
37.4
83.6
62.3
69.8
36.4
83.9
62.4
34.9
75.4
85.2
57.9
12.0
73.6
39.5
88.5
65.2
66.3
33.2
79.5
60.3
633.5
0.2
0.4
0.3
0.5
7.5
5.2
2.3
2.4
3.5
:
6.4
3.5
9.3
5.5
12.0
4.7
0.0
12.2
5.9
3.0
4.6
10.2
5.8
5.3
30.1
40.6
41.1
40.0

-15.6
-4.0
3.8
3.2

9.7
4.2
14.0
11.1
-3.8

1336
906
67.8
670
337
333
74.0
39.9
87.8
66.7
72.8
79.2
77.6
45.0
91.9
67.4
70.6
34.7
83.9
66.1
63.5
28.9
76.4
60.5
27.7
66.3
82.1
52.8
10.7
64.1
30.7
77.4
59.4
63.0
27.0
75.5
61.2
575.8
-10.0
-9.1
-13.0
-5.1
8.0
5.4
2.6
2.5
3.1
2.0
9.4
6.1
12.5
13.8
27.5
13.0
9.4
29.9
16.1
6.4
12.1
22.6
16.9
10.6
27.4
39.5
39.9
39.0

-9.7
-31.0
-7.5
-15.8

-3.4
-2.4
-1.8
-14.6
-4.7

1335
904
67.7
667
333
334
73.8
38.3
88.2
64.2
72.6
79.6
76.8
42.3
91.8
64.5
71.0
34.2
84.9
63.9
61.0
25.7
74.8
53.8
26.2
63.3
78.5
51.6
9.4
61.5
27.4
75.7
52.3
60.5
24.0
73.9
54.9
551.8
-4.8
-4.2
-4.2
-4.2
7.9
5.4
2.5
3.7
4.9
2.7
9.8
6.2
13.1
16.9
32.9
15.4
16.2
32.4
19.6
9.5
14.5
29.7
19.5
14.3
45.3
40.5
41.2
39.8

2.2
-26.1
-4.2
-5.7

1.4
0.3
-2.0
-3.9
7.4

1337
903
67.6
674
339
335
74.7
40.6
88.3
64.7
73.8
79.6
78.1
44.0
92.1
67.1
71.5
37.1
84.7
62.9
65.1
31.5
78.1
57.2
30.9
68.6
79.1
55.6
9.6
67.7
33.6
81.5
57.3
62.8
29.4
74.8
57.1
588.2
7.0
6.6
10.0
3.4
8.0
5.7
2.4
4.5
5.5
3.5
9.3
5.0
13.5
12.5
22.3
11.8
11.6
27.4
13.0
8.2
11.0
21.9
13.1
11.8
56.8
40.6
41.1
40.1

13.5
23.8
:
12.7

1.4
-2.2
4.6
8.5
0.6

Statistical annex

Labour market data

2010-2011
0.1 %
-0.2 %
-0.2 pps
1.1 %
1.7 %
0.4 %
0.9 pps
2.3 pps
0.1 pps
0.5 pps
1.2 pps
0.0 pps
1.3 pps
1.7 pps
0.4 pps
2.6 pps
0.5 pps
2.9 pps
-0.2 pps
-1.1 pps
4.1 pps
5.8 pps
3.3 pps
3.4 pps
4.7 pps
5.4 pps
0.5 pps
4.0 pps
0.1 pps
6.1 pps
6.2 pps
5.8 pps
5.0 pps
2.3 pps
5.5 pps
0.9 pps
2.2 pps
6.6 %
11.8 pps
10.8 pps
14.2 pps
7.6 pps
0.1 pps
0.3 pps
-0.2 pps
0.8 pps
0.6 pps
0.8 pps
-0.5 pps
-1.2 pps
0.4 pps
-4.4 pps
-10.6 pps
-3.6 pps
-4.6 pps
-5.0 pps
-6.6 pps
-1.3 pps
-3.5 pps
-7.8 pps
-6.4 pps
-2.5 pps
11.5 pps
0.2 %
-0.2 %
0.8 %

11.3 pps
49.9 pps
: pps
18.4 pps

0.0 pps
-2.6 pps
6.6 pps
12.4 pps
-6.8 pps

125

European Commission

Labour Market Developments in Europe, 2012

Ireland

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

126

4357
2997
68.8
2174
1236
938
72.5
55.4
81.9
55.1
71.5
78.9
81.6
58.8
91.6
69.6
63.3
51.9
71.9
40.4
69.2
50.4
78.6
53.8
49.4
74.2
85.6
58.5
10.6
77.5
53.0
87.7
67.8
60.6
47.8
69.3
39.5
2072.6
3.6
3.4
2.2
5.0
15.4
12.7
2.6
8.0
6.7
9.5
17.3
6.4
31.6
4.6
9.0
4.1
2.4
7.6
4.4
2.7
4.4
6.1
4.9
4.1
29.6
40.5
42.4
36.9

:
3.2
4.7
:

5.8
5.2
4.6
8.6
1.5

4440
3041
68.5
2189
1236
953
72.0
52.6
81.6
55.5
71.0
77.3
80.7
55.2
91.3
68.6
63.1
49.9
71.8
42.2
67.6
45.9
77.3
53.7
46.9
71.9
84.4
56.7
10.9
74.9
46.7
85.5
66.1
60.2
45.1
69.0
41.1
2054.8
-1.1
-0.9
-2.4
1.2
15.7
12.8
2.8
8.4
7.1
9.8
18.1
7.1
31.9
6.3
12.7
5.4
3.3
10.1
6.2
3.4
5.8
7.7
7.4
4.9
27.1
40.2
42.0
36.8

3.8
-11.8
-0.2
-4.4

5.4
8.8
4.5
3.6
-1.9

4468
3028
67.8
2143
1195
948
70.8
47.4
81.1
54.8
70.0
75.4
78.8
48.6
90.3
66.7
62.7
46.1
71.9
42.9
62.2
35.8
72.4
51.3
40.5
64.8
80.9
53.4
8.9
66.9
33.5
77.8
61.3
57.6
38.1
66.9
41.1
1884.8
-8.1
-8.3
-11.5
-4.1
16.0
13.0
3.0
8.6
7.5
9.6
20.9
10.0
33.5
11.9
24.3
11.2
6.5
17.9
13.5
7.1
11.4
15.8
14.9
8.0
29.2
39.5
41.4
36.2

-16.3
-33.8
-5.5
-10.2

-1.2
3.9
3.1
-9.4
1.2

4476
3002
67.1
2094
1157
937
69.8
42.3
80.7
54.9
69.3
73.1
77.4
43.1
89.6
65.3
62.2
41.5
71.8
44.5
60.1
30.5
70.4
50.2
37.2
61.5
79.8
52.5
7.6
64.1
28.4
75.2
58.2
56.1
32.6
65.7
42.1
1803.8
-4.2
-4.3
-5.5
-2.9
15.4
12.3
3.1
9.3
8.6
10.0
22.0
11.1
34.3
13.7
27.8
13.1
8.7
22.0
15.9
7.7
13.3
17.4
16.9
9.7
49.3
39.6
41.6
36.4

-11.5
-23.1
-2.9
-6.2

-3.2
-0.9
-0.6
-6.5
4.0

4491
2979
66.3
2067
1138
929
69.4
39.9
80.3
55.3
68.9
73.3
76.8
40.6
89.1
65.0
62.1
39.1
71.7
45.6
59.2
28.2
69.4
50.0
35.5
60.0
79.8
52.0
7.2
63.1
26.3
74.1
57.2
55.4
30.0
64.8
42.9
1764.0
-2.1
-2.2
-2.4
-2.0
15.1
12.0
3.1
9.9
9.5
10.3
22.9
12.2
35.1
14.4
29.4
14.1
9.5
24.1
17.1
7.7
14.3
17.5
17.5
10.6
59.4
39.7
41.7
36.5

-2.3
-10.7
:
-1.6

-0.2
0.0
-1.7
:
2.8

2010-2011
0.3 %
-0.8 %
-0.7 pps
-1.3 %
-1.7 %
-0.9 %
-0.4 pps
-2.4 pps
-0.3 pps
0.4 pps
-0.4 pps
0.3 pps
-0.6 pps
-2.5 pps
-0.5 pps
-0.3 pps
-0.1 pps
-2.4 pps
-0.1 pps
1.1 pps
-0.9 pps
-2.4 pps
-1.0 pps
-0.1 pps
-1.7 pps
-1.5 pps
-0.1 pps
-0.5 pps
-0.3 pps
-1.0 pps
-2.1 pps
-1.0 pps
-1.0 pps
-0.7 pps
-2.6 pps
-1.0 pps
0.8 pps
-2.2 %
2.1 pps
2.1 pps
3.1 pps
1.0 pps
-0.3 pps
-0.3 pps
0.0 pps
0.6 pps
0.9 pps
0.3 pps
0.9 pps
1.1 pps
0.8 pps
0.7 pps
1.6 pps
1.0 pps
0.8 pps
2.1 pps
1.2 pps
0.0 pps
1.0 pps
0.1 pps
0.6 pps
0.9 pps
10.1 pps
0.3 %
0.2 %
0.3 %

9.2 pps
12.4 pps
: pps
4.6 pps

3.0 pps
0.9 pps
-1.1 pps
: pps
-1.2 pps

Greece

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

10754
7208
67.0
4829
2849
1981
67.0
31.1
81.9
43.9
66.6
73.3
79.1
34.7
94.6
60.8
54.9
27.6
69.1
28.2
61.4
24.0
75.6
42.4
52.3
60.8
81.9
56.9
4.4
74.9
29.2
90.1
59.1
47.9
18.7
60.8
26.9
4423.5
1.6
1.3
1.3
1.4
28.7
20.9
7.8
10.9
9.3
13.2
5.4
2.5
9.9
8.3
22.9
8.3
3.4
7.8
9.8
7.1
8.5
7.5
5.2
12.8
49.9
42.4
43.7
40.1

:
6.3
2.1
:

5.0
1.4
3.3
7.0
1.4

10780
7232
67.1
4851
2860
1991
67.1
30.2
82.0
44.2
66.6
73.6
79.1
34.3
94.4
60.9
55.1
26.1
69.4
28.6
61.9
23.6
76.1
42.8
52.4
61.2
82.1
56.8
5.1
75.0
28.5
90.2
59.1
48.7
18.5
61.9
27.5
4473.7
0.8
1.1
0.5
2.1
28.8
20.6
8.2
11.5
9.9
13.7
5.4
2.5
9.8
7.7
22.1
7.6
3.2
7.6
8.8
6.3
7.9
6.8
5.1
11.4
47.5
42.2
43.5
40.1

-0.5
-0.7
1.7
2.0

6.1
1.3
2.6
7.1
-0.9

10839
7222
66.6
4894
2857
2036
67.8
30.9
82.8
44.2
67.1
74.8
79.0
34.4
94.4
60.1
56.5
27.4
71.0
29.3
61.2
22.9
75.4
42.2
51.9
60.4
81.6
55.4
5.8
73.5
27.7
88.4
57.7
48.9
18.1
62.2
27.7
4423.2
-0.2
-1.1
-2.0
0.3
29.2
20.9
8.3
12.1
10.6
14.1
5.8
2.9
10.1
9.5
25.8
9.4
4.6
9.7
11.0
7.4
9.5
10.5
6.9
13.2
40.8
42.1
43.4
39.9

2.5
-4.5
-0.4
-1.0

4.0
1.1
7.6
4.8
-3.0

10882
7231
66.5
4934
2858
2077
68.2
30.3
83.3
45.1
67.5
75.8
78.9
33.4
94.2
60.2
57.6
27.3
72.2
30.9
59.6
20.3
73.3
42.3
50.0
58.6
78.9
53.9
5.6
70.9
24.5
85.3
56.5
48.1
16.2
61.1
28.9
4306.5
-1.9
-2.6
-3.3
-1.6
29.6
20.9
8.7
12.4
11.0
14.4
6.2
3.4
10.2
12.6
32.9
12.6
6.3
12.9
14.5
9.8
12.5
15.0
9.9
16.2
45.0
42.3
43.5
40.2

2.1
-10.6
-2.0
-5.5

-3.3
-5.0
-1.0
-6.0
-1.7

10925
7230
66.2
4892
2819
2073
67.7
29.2
83.2
43.1
67.0
74.6
77.7
31.8
93.5
57.3
57.5
26.6
72.7
29.7
55.6
16.3
69.0
39.4
45.7
54.4
74.1
50.7
4.9
65.9
19.6
80.0
52.3
45.1
12.9
57.7
27.3
4016.6
-6.7
-6.7
-7.0
-6.4
30.4
21.2
9.1
11.6
10.5
12.9
6.6
4.2
10.0
17.7
44.4
18.0
8.5
18.5
20.1
14.0
17.6
20.7
15.0
21.4
49.6
42.4
43.5
40.6

-7.7
-22.6
:
-11.5

-3.2
-4.7
:
-10.4
-0.2

Statistical annex

Labour market data

2010-2011
0.4 %
0.0 %
-0.3 pps
-0.9 %
-1.4 %
-0.2 %
-0.6 pps
-1.1 pps
-0.1 pps
-2.1 pps
-0.5 pps
-1.2 pps
-1.1 pps
-1.6 pps
-0.7 pps
-2.9 pps
0.0 pps
-0.6 pps
0.5 pps
-1.2 pps
-4.0 pps
-4.1 pps
-4.4 pps
-2.9 pps
-4.3 pps
-4.2 pps
-4.8 pps
-3.3 pps
-0.7 pps
-5.0 pps
-4.9 pps
-5.4 pps
-4.2 pps
-3.0 pps
-3.3 pps
-3.4 pps
-1.6 pps
-6.7 %
-4.8 pps
-4.1 pps
-3.7 pps
-4.8 pps
0.7 pps
0.4 pps
0.4 pps
-0.8 pps
-0.5 pps
-1.5 pps
0.4 pps
0.8 pps
-0.2 pps
5.1 pps
11.5 pps
5.4 pps
2.2 pps
5.6 pps
5.6 pps
4.2 pps
5.1 pps
5.7 pps
5.1 pps
5.2 pps
4.6 pps
0.2 %
0.0 %
1.0 %

-9.8 pps
-12.0 pps
: pps
-6.0 pps

0.2 pps
0.2 pps
: pps
-4.4 pps
1.5 pps

127

European Commission

Labour Market Developments in Europe, 2012

Spain

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

128

44630
30808
69.0
22043
12702
9341
71.6
47.8
82.8
47.4
70.5
78.5
81.4
52.1
92.6
63.1
61.4
43.3
72.7
32.5
65.6
39.1
76.8
44.6
57.5
68.2
82.5
56.6
9.0
76.2
44.2
87.6
60.0
54.7
33.8
65.6
30.0
20211.3
3.0
3.1
2.1
4.6
16.3
11.5
4.8
31.7
30.6
33.1
11.6
3.9
22.7
8.3
18.2
7.4
5.9
10.5
8.1
5.3
7.7
12.2
6.4
10.9
20.4
41.1
42.0
39.5

:
5.6
3.8
:

4.6
1.4
4.6
8.2
0.4

45329
31252
68.9
22689
12933
9756
72.6
47.7
83.8
49.2
71.5
79.1
81.8
51.5
92.6
65.1
63.2
43.7
74.7
34.2
64.3
36.0
75.3
45.6
55.5
67.4
81.7
55.0
9.3
73.5
39.3
84.4
60.9
54.9
32.5
65.9
31.1
20102.8
-0.1
-0.5
-2.2
1.9
16.3
11.4
4.9
29.3
27.7
31.4
11.8
4.0
22.6
11.3
24.6
10.4
7.3
15.4
10.6
6.4
10.3
17.5
10.1
13.0
17.8
41.0
41.9
39.4

-3.9
-11.4
2.9
-1.3

6.7
3.6
5.1
6.0
1.0

45671
31349
68.6
22881
12844
10037
73.0
45.1
84.7
50.2
71.9
79.0
81.0
48.3
92.3
64.0
64.8
41.7
76.7
37.2
59.8
28.0
70.7
44.1
49.6
62.6
79.0
51.4
8.4
66.6
29.5
77.3
56.7
52.8
26.5
63.8
32.3
18736.0
-6.5
-6.8
-9.2
-3.5
15.7
10.8
5.0
25.5
23.8
27.3
12.6
4.7
22.9
18.0
37.8
17.1
12.1
24.7
17.1
9.8
16.1
28.5
17.7
18.4
23.7
40.7
41.6
39.2

-4.8
-22.2
-4.8
-13.9

4.3
4.2
4.9
-2.5
3.0

45820
31261
68.2
22933
12730
10203
73.4
42.7
85.5
50.8
72.2
80.0
80.7
45.1
92.5
63.9
65.9
40.1
78.3
38.5
58.6
24.9
69.6
43.6
48.2
60.6
77.5
50.4
8.1
64.7
25.6
75.7
54.7
52.3
24.2
63.2
33.2
18304.1
-2.5
-2.3
-3.3
-1.0
15.7
10.8
4.9
25.0
23.9
26.2
13.1
5.2
23.1
20.1
41.6
19.2
14.1
27.5
19.3
11.3
18.3
30.2
19.7
20.5
36.6
40.7
41.6
39.3

1.1
-12.6
-2.2
-5.2

0.2
-0.4
0.8
-0.7
2.2

45908
31127
67.8
22949
12596
10354
73.7
40.9
86.0
52.3
72.8
79.4
80.4
42.6
92.6
63.7
67.0
39.1
79.3
41.7
57.7
21.9
68.7
44.5
47.3
58.7
76.5
50.1
7.6
63.2
22.1
74.5
53.9
52.0
21.8
62.7
35.6
17953.3
-1.5
-1.9
-2.9
-0.7
15.5
10.5
5.0
25.4
24.2
26.6
13.7
5.9
23.4
21.7
46.4
20.8
15.0
29.2
21.5
12.7
19.7
32.9
21.2
22.2
41.6
40.7
41.6
39.3

-3.2
-15.6
:
-0.9

0.5
-0.5
2.8
:
2.0

2010-2011
0.2 %
-0.4 %
-0.4 pps
0.1 %
-1.1 %
1.5 %
0.4 pps
-1.8 pps
0.5 pps
1.5 pps
0.6 pps
-0.6 pps
-0.3 pps
-2.5 pps
0.1 pps
-0.2 pps
1.1 pps
-1.0 pps
1.0 pps
3.2 pps
-0.9 pps
-3.0 pps
-0.9 pps
0.9 pps
-1.0 pps
-1.9 pps
-1.0 pps
-0.4 pps
-0.5 pps
-1.4 pps
-3.6 pps
-1.3 pps
-0.8 pps
-0.3 pps
-2.4 pps
-0.5 pps
2.4 pps
-1.9 %
1.0 pps
0.4 pps
0.4 pps
0.3 pps
-0.2 pps
-0.3 pps
0.0 pps
0.4 pps
0.3 pps
0.4 pps
0.6 pps
0.7 pps
0.3 pps
1.6 pps
4.8 pps
1.6 pps
0.9 pps
1.7 pps
2.2 pps
1.4 pps
1.4 pps
2.7 pps
1.5 pps
1.7 pps
5.0 pps
0.0 %
0.0 %
0.0 %

-4.3 pps
-3.0 pps
: pps
4.3 pps

0.3 pps
-0.1 pps
2.0 pps
: pps
-0.2 pps

France

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

60505
39569
65.4
27647
14538
13109
69.9
38.4
88.1
40.2
70.2
63.9
74.7
41.8
94.2
42.7
65.2
35.0
82.3
37.8
64.3
31.0
82.0
38.2
47.5
69.2
79.2
61.1
3.1
69.1
34.1
88.2
40.5
59.6
27.9
76.0
36.0
25425.7
1.4
1.7
1.0
2.4
10.2
7.3
2.9
15.0
14.0
16.1
17.2
5.5
30.4
8.4
19.1
7.2
5.1
12.3
7.2
5.5
7.5
16.4
7.8
9.0
40.2
39.6
40.8
37.6

:
4.1
1.8
:

2.5
0.0
4.0
4.1
0.9

60825
39736
65.3
27817
14603
13214
70.0
38.5
88.6
40.0
70.3
64.7
74.7
42.2
94.4
42.6
65.4
34.8
83.1
37.6
64.8
31.4
83.0
38.2
47.0
69.3
80.7
61.4
3.3
69.5
34.4
89.1
40.6
60.2
28.3
77.2
35.9
25756.3
0.5
1.3
1.1
1.6
9.8
6.9
3.0
14.8
13.7
16.1
16.8
5.6
29.4
7.8
18.6
6.5
4.6
11.8
6.9
4.5
7.0
14.1
7.3
8.4
37.4
39.5
40.7
37.7

-3.1
2.8
0.8
-1.3

2.6
0.2
3.5
3.1
-0.6

61129
39858
65.2
28087
14705
13383
70.5
39.8
88.8
41.5
70.9
64.0
75.0
43.1
94.4
44.3
66.1
36.5
83.4
38.9
64.0
30.5
82.0
38.9
45.8
68.2
79.8
60.8
3.1
68.3
32.7
87.6
41.5
59.9
28.3
76.6
36.6
25515.1
-1.3
-0.9
-1.5
-0.3
10.2
7.3
3.0
14.3
12.9
15.7
17.2
5.8
29.8
9.5
23.2
8.0
6.2
14.4
8.8
5.6
8.7
17.9
9.3
9.8
35.2
39.4
40.6
37.5

-2.5
0.2
-2.0
-4.8

1.8
1.3
0.9
0.0
-1.9

61458
39995
65.1
28181
14733
13448
70.5
39.1
88.9
42.6
70.9
64.5
74.9
42.8
94.2
45.3
66.1
35.5
83.7
40.0
63.9
30.2
81.8
39.8
45.2
67.8
80.2
60.5
3.4
68.2
33.3
87.1
42.2
59.7
27.1
76.6
37.5
25545.4
-0.1
0.1
0.1
0.1
10.7
7.6
3.1
14.9
14.0
15.9
17.6
6.4
30.0
9.7
22.8
8.3
6.6
15.4
8.8
5.5
8.9
17.2
9.4
10.1
40.2
39.8
41.0
38.0

-3.4
-1.6
0.7
-3.8

2.3
1.5
3.1
2.3
1.7

61773
40057
64.8
28192
14721
13471
70.4
38.3
88.5
44.4
70.7
65.4
74.8
41.6
93.8
47.2
66.2
34.9
83.4
41.8
63.9
29.9
81.4
41.5
45.0
67.2
80.5
60.4
3.4
68.2
32.8
86.7
44.1
59.7
26.9
76.2
39.1
25582.5
0.5
0.1
0.1
0.1
10.9
7.7
3.2
15.2
14.6
15.8
17.6
6.5
29.9
9.6
22.0
8.4
6.5
15.2
8.9
5.4
8.7
18.2
9.1
10.2
41.5
39.8
41.0
38.0

-2.5
-0.6
:
-0.9

2.9
1.5
3.4
2.9
1.2

Statistical annex

Labour market data

2010-2011
0.5 %
0.2 %
-0.2 pps
0.0 %
-0.1 %
0.2 %
-0.1 pps
-0.8 pps
-0.4 pps
1.8 pps
-0.1 pps
1.0 pps
-0.2 pps
-1.1 pps
-0.5 pps
1.9 pps
0.0 pps
-0.5 pps
-0.3 pps
1.8 pps
0.0 pps
-0.3 pps
-0.4 pps
1.8 pps
-0.1 pps
-0.6 pps
0.3 pps
-0.1 pps
0.1 pps
0.0 pps
-0.4 pps
-0.4 pps
1.9 pps
0.0 pps
-0.2 pps
-0.4 pps
1.6 pps
0.1 %
0.6 pps
0.0 pps
0.0 pps
0.0 pps
0.1 pps
0.1 pps
0.1 pps
0.3 pps
0.6 pps
-0.1 pps
0.0 pps
0.1 pps
-0.1 pps
-0.1 pps
-0.8 pps
0.1 pps
-0.1 pps
-0.2 pps
0.1 pps
-0.1 pps
-0.2 pps
1.0 pps
-0.3 pps
0.1 pps
1.3 pps
0.0 %
0.0 %
0.0 %

0.9 pps
1.0 pps
: pps
2.9 pps

0.5 pps
0.0 pps
0.3 pps
0.6 pps
-0.5 pps

129

European Commission

Labour Market Developments in Europe, 2012

Italy
1
2

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

3

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

2007

2008

2009

2010

2011

58880
38946
66.1
24350
14483
9867
62.5
30.9
77.6
34.6
61.9
73.2
74.4
36.1
91.0
46.3
50.7
25.5
64.1
23.5
58.7
24.7
73.5
33.8
46.5
67.9
77.7
54.8
3.8
70.7
29.6
87.3
45.1
46.6
19.5
59.6
23.0
22846.2
1.3
1.0
0.8
1.3
23.4
16.7
6.8
13.2
11.2
16.0
13.4
4.6
26.8
6.1
20.3
5.8
2.4
7.5
5.7
4.5
6.0
8.3
4.9
7.9
47.4
40.6
41.9
37.8

:
3.2
1.5
:

2.0
-0.1
2.3
3.8
0.4

59336
39182
66.0
24696
14571
10125
63.0
30.9
78.1
35.5
62.3
73.3
74.4
35.9
91.0
47.0
51.6
25.7
65.2
24.7
58.7
24.4
73.5
34.4
46.0
67.9
78.5
54.3
4.4
70.3
29.1
86.7
45.5
47.2
19.4
60.2
24.0
23010.5
0.3
0.7
-0.1
1.9
22.9
16.3
6.6
13.3
11.5
15.7
14.1
4.8
27.8
6.7
21.3
6.4
3.1
8.6
6.2
4.6
6.7
8.5
5.5
8.5
45.6
40.4
41.7
37.7

-2.1
0.4
0.9
-0.8

3.0
1.3
4.1
3.5
-1.4

59752
39406
65.9
24591
14498
10093
62.4
29.1
77.2
37.0
61.6
72.7
73.7
34.0
90.0
48.5
51.1
23.9
64.5
26.1
57.5
21.7
71.9
35.7
44.5
66.5
77.0
52.7
4.8
68.6
26.1
84.7
46.7
46.4
17.0
59.1
25.4
22650.1
-1.6
-1.6
-1.9
-1.1
22.5
16.1
6.4
12.5
10.8
14.6
14.1
4.7
27.9
7.8
25.4
7.4
3.4
9.6
7.3
5.6
7.6
11.2
6.8
9.3
44.4
39.9
41.1
37.4

-2.6
-1.4
-1.7
-4.8

-0.1
-0.4
4.7
-1.0
-3.9

60051
39546
65.9
24594
14457
10137
62.2
28.4
76.9
38.0
61.4
71.4
73.3
33.2
89.4
49.6
51.1
23.4
64.4
27.0
56.9
20.5
71.1
36.6
43.6
65.7
76.4
51.6
5.2
67.7
24.3
83.5
47.6
46.1
16.5
58.7
26.2
22496.5
-0.7
-0.7
-1.1
0.0
22.7
16.3
6.4
12.8
11.4
14.5
14.8
5.1
29.0
8.4
27.8
8.1
3.6
10.5
8.0
5.8
8.2
11.7
7.6
9.7
48.4
40.1
41.3
37.6

1.4
-1.8
0.1
-3.6

2.0
1.9
2.0
0.9
2.5

60328
39659
65.7
24686
14438
10248
62.2
27.4
76.9
39.5
61.4
70.9
73.1
31.6
89.2
50.7
51.5
22.9
64.6
28.9
56.9
19.4
71.1
37.9
43.7
65.2
77.0
51.3
5.6
67.5
23.1
83.4
48.4
46.5
15.5
58.9
28.1
22582.7
0.3
0.4
-0.1
1.2
22.5
16.1
6.4
13.4
12.3
14.7
15.2
5.5
29.3
8.4
29.1
8.0
3.9
10.8
7.9
5.5
8.1
12.2
7.6
9.6
51.9
39.9
41.2
37.5

-2.0
-3.5
:
0.3

1.1
0.0
2.3
1.8
0.1

2010-2011
0.5 %
0.3 %
-0.1 pps
0.4 %
-0.1 %
1.1 %
0.1 pps
-1.0 pps
0.0 pps
1.5 pps
0.0 pps
-0.5 pps
-0.2 pps
-1.6 pps
-0.2 pps
1.1 pps
0.4 pps
-0.5 pps
0.2 pps
1.9 pps
0.1 pps
-1.1 pps
0.0 pps
1.3 pps
0.1 pps
-0.6 pps
0.6 pps
-0.3 pps
0.4 pps
-0.2 pps
-1.2 pps
-0.2 pps
0.7 pps
0.4 pps
-0.9 pps
0.2 pps
1.9 pps
0.4 %
1.0 pps
1.1 pps
1.0 pps
1.2 pps
-0.2 pps
-0.2 pps
0.0 pps
0.6 pps
0.9 pps
0.2 pps
0.4 pps
0.4 pps
0.3 pps
0.0 pps
1.3 pps
-0.1 pps
0.3 pps
0.3 pps
-0.1 pps
-0.3 pps
-0.1 pps
0.5 pps
0.0 pps
-0.1 pps
3.5 pps
-0.5 %
-0.2 %
-0.3 %

-3.4 pps
-1.7 pps
: pps
3.9 pps

-0.9 pps
-1.8 pps
0.3 pps
0.9 pps
-2.4 pps

130

Cyprus

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

752
518
68.9
383
209
174
73.9
41.6
86.7
57.7
73.7
75.5
82.9
43.9
95.0
74.9
65.4
39.7
78.7
41.5
71.0
37.5
83.8
55.9
52.9
73.6
86.5
60.6
10.3
80.0
39.1
92.4
72.6
62.4
35.9
75.5
40.4
367.9
3.2
5.6
4.2
7.4
17.5
13.0
4.5
13.3
7.6
19.2
6.4
3.0
10.4
4.1
10.2
3.3
3.1
5.1
4.0
3.4
3.7
5.7
3.6
4.6
18.6
40.4
41.7
38.7

:
4.9
2.9
:

3.0
-1.3
3.6
6.8
1.8

758
524
69.1
386
210
176
73.6
41.8
86.4
56.6
73.0
76.8
82.0
43.2
94.0
73.0
65.7
40.5
79.1
41.1
70.8
38.0
83.7
54.8
50.9
74.1
86.5
58.6
12.3
79.2
39.5
91.4
70.8
62.8
36.7
76.3
39.4
371.1
2.1
0.9
0.6
1.2
16.9
12.6
4.3
14.0
8.2
20.0
6.8
3.4
10.8
3.8
9.0
3.3
3.2
5.2
3.7
3.0
3.4
5.4
3.4
4.3
13.6
40.5
41.8
38.7

-3.0
2.3
1.8
0.1

3.2
-1.3
6.2
8.0
1.4

763
528
69.2
391
213
178
73.9
41.1
86.6
58.5
73.5
76.1
82.0
42.2
93.5
74.8
66.2
40.2
79.7
42.7
69.9
35.5
82.6
55.9
51.8
72.5
84.8
57.5
12.5
77.6
36.4
89.2
71.6
62.5
34.5
76.0
40.9
369.3
-0.5
-0.5
-0.5
-0.4
16.6
11.9
4.7
13.5
7.5
19.9
7.4
3.9
11.5
5.5
13.8
4.7
4.3
6.6
5.6
4.5
4.9
8.0
5.4
5.5
10.3
40.2
41.6
38.4

6.3
-4.7
-2.8
-2.1

5.3
5.2
3.8
4.9
-1.3

771
534
69.3
398
215
183
74.4
40.6
87.2
59.6
73.2
79.1
81.7
40.3
93.5
75.0
67.4
40.8
80.9
44.8
69.7
33.8
82.5
56.8
52.7
71.4
83.1
55.0
14.7
76.6
33.8
88.4
71.3
63.0
33.7
76.6
43.1
372.3
0.0
0.8
-0.2
2.0
15.5
11.0
4.5
13.6
6.9
20.6
8.1
4.9
11.8
6.4
16.7
5.7
4.7
7.7
6.3
5.7
5.7
8.7
6.3
6.4
20.3
40.7
41.9
39.2

2.4
-5.8
-0.1
-3.0

-0.2
-1.9
1.9
0.0
1.1

773
535
69.2
396
215
181
74.0
37.8
87.5
58.0
72.4
79.8
81.3
39.8
93.2
73.6
66.8
36.1
81.9
43.0
68.1
29.4
81.6
55.2
50.6
69.3
81.5
53.0
15.1
74.7
30.6
86.5
69.8
61.6
28.3
76.6
41.0
364.1
0.5
-2.2
-2.0
-2.3
15.1
10.9
4.2
13.7
7.0
20.7
8.7
5.9
12.1
7.9
22.4
7.2
4.9
8.0
8.7
7.2
7.4
9.9
8.1
7.7
20.9
40.7
41.6
39.5

-0.7
-4.9
:
-4.2

2.0
0.0
1.7
2.5
-0.1

Statistical annex

Labour market data

2010-2011
0.2 %
0.1 %
0.0 pps
-0.5 %
0.0 %
-1.0 %
-0.5 pps
-2.8 pps
0.4 pps
-1.6 pps
-0.8 pps
0.7 pps
-0.4 pps
-0.5 pps
-0.3 pps
-1.4 pps
-0.6 pps
-4.7 pps
0.9 pps
-1.9 pps
-1.6 pps
-4.5 pps
-0.9 pps
-1.5 pps
-2.0 pps
-2.1 pps
-1.6 pps
-2.0 pps
0.4 pps
-1.9 pps
-3.2 pps
-1.9 pps
-1.5 pps
-1.3 pps
-5.4 pps
0.0 pps
-2.1 pps
-2.2 %
0.5 pps
-3.0 pps
-1.8 pps
-4.4 pps
-0.4 pps
-0.1 pps
-0.3 pps
0.1 pps
0.1 pps
0.1 pps
0.6 pps
1.0 pps
0.3 pps
1.5 pps
5.7 pps
1.5 pps
0.2 pps
0.3 pps
2.4 pps
1.5 pps
1.7 pps
1.2 pps
1.8 pps
1.3 pps
0.6 pps
0.0 %
-0.7 %
0.8 %

-3.1 pps
0.9 pps
: pps
-1.2 pps

2.2 pps
1.9 pps
-0.2 pps
2.5 pps
-1.2 pps

131

European Commission

Labour Market Developments in Europe, 2012

Latvia

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

132

2281
1573
69.0
1145
591
555
72.8
43.0
87.2
60.3
72.8
69.9
77.6
48.9
91.0
67.9
68.3
36.8
83.6
54.6
68.3
38.3
82.3
57.7
38.6
74.3
86.9
67.4
0.9
72.5
43.4
85.6
64.6
64.4
33.1
79.1
52.4
1075.1
3.6
2.7
2.8
2.5
8.8
5.8
3.0
4.2
5.6
2.8
5.6
4.4
6.9
6.5
10.7
5.6
4.4
10.8
5.9
3.7
6.2
0.0
6.9
6.0
26.3
41.8
42.6
40.8

:
23.1
4.6
:

35.1
11.9
30.1
43.3
5.8

2271
1568
69.0
1167
597
570
74.4
42.9
88.9
63.3
73.8
77.8
78.6
48.8
92.2
68.8
70.5
36.7
85.7
59.3
68.7
37.2
82.6
59.4
37.1
74.5
86.9
58.1
10.5
72.1
42.4
85.4
63.1
65.4
31.9
79.9
56.7
1076.3
0.9
0.1
-0.8
1.1
8.5
5.7
2.9
3.3
4.6
1.9
5.5
3.9
7.1
8.0
13.1
7.2
6.2
14.6
7.7
4.2
7.1
11.1
8.6
7.4
25.7
40.7
41.3
40.0

-15.1
1.7
4.7
-2.9

15.7
2.4
22.3
19.4
-4.2

2261
1560
69.0
1153
583
570
73.9
41.7
88.5
61.4
73.6
75.7
77.0
46.8
91.1
63.8
71.0
36.3
86.1
59.7
61.0
27.7
74.7
53.2
29.4
64.6
82.3
51.7
9.3
61.0
29.3
74.5
53.2
60.9
26.0
74.9
53.3
950.9
-13.2
-11.7
-15.6
-7.6
9.7
6.1
3.5
4.4
5.9
3.0
8.4
7.0
9.6
18.2
33.6
15.8
13.4
31.4
18.7
8.4
16.4
23.5
21.7
14.8
26.7
40.6
41.1
40.0

-5.0
-38.7
-9.4
-18.8

-12.7
-11.6
-0.1
-26.6
-5.3

2248
1549
68.9
1134
570
564
73.2
40.4
88.5
57.2
73.1
74.0
75.8
43.0
91.3
58.9
70.7
37.7
85.9
55.8
59.3
26.4
73.4
48.2
28.3
61.5
80.6
50.6
8.7
59.2
27.8
72.9
47.6
59.4
25.0
73.8
48.7
918.9
-4.8
-3.4
-3.6
-3.2
9.9
5.9
4.0
6.8
8.9
5.0
9.3
7.5
11.0
19.8
34.5
17.0
15.6
32.3
20.4
10.5
17.6
26.1
23.1
16.7
45.1
40.2
40.6
39.8

-3.2
-19.5
-4.4
0.8

-5.5
-3.4
-2.9
-10.4
4.7

2230
1536
68.9
1125
572
554
73.3
38.4
88.1
59.8
73.0
74.7
76.5
42.5
91.1
63.1
70.2
34.2
85.2
57.3
61.8
27.3
75.8
51.1
30.8
63.2
84.0
52.8
9.0
62.8
30.0
76.2
52.6
60.8
24.4
75.4
49.9
949.3
-8.1
3.3
5.4
1.4
10.2
6.2
4.0
6.5
7.9
5.2
8.8
7.3
10.3
16.2
29.1
13.9
14.5
28.0
17.6
6.8
14.6
21.2
18.6
13.8
54.6
40.3
40.8
39.8

-7.4
-6.5
:
-10.1

17.2
11.2
3.4
6.8
14.8

2010-2011
-0.8 %
-0.8 %
0.0 pps
-0.8 %
0.2 %
-1.8 %
0.1 pps
-1.9 pps
-0.4 pps
2.6 pps
-0.1 pps
0.7 pps
0.7 pps
-0.5 pps
-0.2 pps
4.2 pps
-0.6 pps
-3.5 pps
-0.7 pps
1.5 pps
2.5 pps
0.8 pps
2.4 pps
2.9 pps
2.5 pps
1.7 pps
3.5 pps
2.2 pps
0.3 pps
3.6 pps
2.2 pps
3.3 pps
5.0 pps
1.4 pps
-0.6 pps
1.6 pps
1.3 pps
3.3 %
-3.3 pps
6.7 pps
9.0 pps
4.5 pps
0.3 pps
0.3 pps
0.0 pps
-0.3 pps
-1.0 pps
0.2 pps
-0.5 pps
-0.2 pps
-0.7 pps
-3.6 pps
-5.4 pps
-3.1 pps
-1.1 pps
-4.3 pps
-2.8 pps
-3.7 pps
-3.0 pps
-4.9 pps
-4.5 pps
-2.9 pps
9.5 pps
0.2 %
0.5 %
0.0 %

-4.2 pps
13.0 pps
: pps
-10.9 pps

22.7 pps
14.6 pps
6.3 pps
17.2 pps
10.1 pps

Lithuania

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

3385
2319
68.5
1575
796
779
67.9
27.4
86.0
55.6
67.9
69.3
71.0
31.8
87.9
63.4
65.0
22.8
84.2
49.7
64.9
25.2
82.5
53.4
25.9
68.6
88.1
64.4
0.5
67.9
29.6
84.3
60.8
62.1
20.5
80.8
47.9
1505.8
2.8
2.0
2.4
1.7
11.7
7.5
4.2
3.5
4.8
2.3
8.1
6.5
9.7
4.3
8.2
4.0
3.8
7.7
5.1
2.1
4.3
:
4.3
4.3
32.0
40.0
40.6
39.3

:
15.9
4.6
:

13.9
4.8
21.3
18.8
6.8

3366
2316
68.8
1584
801
783
68.4
30.8
85.5
55.6
68.3
76.1
71.4
35.4
87.4
63.0
65.5
26.0
83.8
50.0
64.3
26.7
81.2
53.1
20.7
68.1
87.7
64.0
0.4
67.1
30.9
82.7
60.2
61.8
22.2
79.7
47.7
1490.2
-0.7
-1.0
-1.2
-0.8
10.0
6.6
3.4
2.4
2.9
1.9
6.5
4.7
8.3
5.8
13.4
4.9
4.4
13.7
6.7
3.0
5.9
:
6.1
5.6
21.1
40.3
40.9
39.7

-23.0
-3.7
4.0
1.2

14.3
4.2
17.8
15.8
3.6

3350
2309
68.9
1612
805
807
69.8
30.4
87.3
57.6
69.8
63.8
72.0
33.8
88.3
63.9
67.8
26.7
86.3
52.9
60.1
21.5
76.3
51.6
17.7
61.9
85.9
59.8
0.3
59.5
22.0
74.6
56.0
60.7
20.9
78.0
48.3
1387.5
-6.8
-6.9
-11.4
-2.2
10.2
6.4
3.8
2.3
3.0
1.6
8.0
6.7
9.1
13.7
29.2
12.5
10.4
30.9
16.4
6.1
13.9
:
17.1
10.4
23.2
39.9
40.5
39.4

9.2
-26.3
-4.9
-13.1

-9.9
-6.4
-6.5
-16.7
-8.6

3311
2283
68.9
1610
800
810
70.5
29.6
88.5
56.8
70.5
72.0
72.4
32.8
89.2
62.9
68.8
26.3
87.9
52.2
57.8
19.2
73.8
48.6
14.4
57.6
85.4
57.5
0.4
56.8
20.2
71.4
52.3
58.7
18.2
76.1
45.8
1319.6
-5.1
-4.9
-5.6
-4.2
9.1
5.4
3.7
2.4
3.3
1.7
7.7
6.3
8.9
17.8
35.1
16.8
14.5
41.1
21.9
7.8
18.0
:
21.2
14.5
41.4
39.8
40.4
39.3

-6.9
-23.8
-0.4
-7.9

-1.0
-2.9
-4.7
-3.5
6.9

3231
2210
68.4
1591
797
794
72.0
29.4
90.0
58.4
72.0
69.0
74.3
33.5
91.0
64.9
69.7
25.0
89.0
53.4
60.7
19.7
77.3
50.5
15.3
59.9
87.5
60.4
0.3
60.9
21.9
76.3
54.6
60.5
17.4
78.3
47.4
1342.1
2.0
1.7
4.0
-0.3
8.9
5.3
3.7
2.8
3.8
1.9
8.2
6.5
9.8
15.4
32.9
14.1
13.5
39.5
19.2
6.4
15.6
:
17.8
13.0
51.9
39.9
40.4
39.4

-3.9
0.4
:
2.1

3.6
-1.6
2.8
6.1
3.8

Statistical annex

Labour market data

2010-2011
-2.4 %
-3.2 %
-0.5 pps
-1.2 %
-0.4 %
-2.0 %
1.4 pps
-0.3 pps
1.5 pps
1.5 pps
1.4 pps
-3.0 pps
1.9 pps
0.7 pps
1.9 pps
1.9 pps
0.9 pps
-1.4 pps
1.1 pps
1.2 pps
2.9 pps
0.5 pps
3.5 pps
1.9 pps
0.9 pps
2.3 pps
2.1 pps
2.9 pps
0.0 pps
4.1 pps
1.7 pps
4.8 pps
2.3 pps
1.8 pps
-0.9 pps
2.2 pps
1.6 pps
1.7 %
7.1 pps
6.6 pps
9.6 pps
3.9 pps
-0.1 pps
-0.1 pps
0.0 pps
0.4 pps
0.5 pps
0.2 pps
0.5 pps
0.2 pps
0.9 pps
-2.4 pps
-2.2 pps
-2.7 pps
-1.0 pps
-1.6 pps
-2.7 pps
-1.4 pps
-2.4 pps
: pps
-3.4 pps
-1.5 pps
10.5 pps
0.3 %
0.0 %
0.3 %

3.0 pps
24.2 pps
: pps
10.0 pps

4.5 pps
1.2 pps
7.5 pps
9.6 pps
-3.1 pps

133

European Commission

Labour Market Developments in Europe, 2012

Luxembourg

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

134

465
316
68.0
211
118
94
66.9
26.6
84.8
32.6
62.7
72.1
75.0
30.7
94.9
36.3
58.9
22.4
74.7
29.2
64.2
22.5
81.9
32.0
49.8
67.4
83.5
33.7
30.4
72.3
26.7
92.2
35.4
56.1
18.3
71.7
28.8
202.6
4.5
4.0
2.4
5.8
7.0
4.5
2.5
6.8
6.2
7.6
17.8
2.6
37.1
4.2
15.2
3.4
:
5.8
3.4
3.2
3.3
4.9
3.4
5.1
28.7
40.8
41.2
40.0

:
5.1
5.1
:

3.7
0.1
3.2
8.9
2.1

467
318
68.1
213
120
92
66.8
29.1
83.4
35.1
62.7
71.9
74.7
30.8
93.8
39.6
58.7
27.0
72.9
30.4
63.4
23.9
80.0
34.1
48.4
65.3
83.7
33.5
29.9
71.5
27.1
90.2
38.8
55.2
20.6
69.5
29.5
201.8
4.7
-0.4
1.6
-2.8
6.1
3.7
2.4
6.2
5.9
6.6
17.9
2.7
38.2
4.9
17.9
4.3
:
6.6
5.9
2.4
3.0
7.3
4.1
5.9
32.2
40.4
40.9
39.3

:
:
:
:

2.2
-2.1
3.1
6.8
-3.8

481
330
68.5
227
128
99
68.7
32.3
84.8
39.3
64.8
73.3
76.5
34.8
94.1
47.7
60.7
29.2
75.3
30.8
65.2
26.7
81.2
38.1
45.0
65.8
83.8
33.6
31.5
73.2
29.0
90.8
46.6
57.0
24.2
71.4
29.6
214.8
1.0
6.4
6.1
6.9
7.4
5.0
2.4
7.2
6.3
8.3
17.6
4.5
34.9
5.1
17.2
4.5
:
8.2
4.3
4.2
3.0
7.3
4.5
5.9
23.2
41.4
42.4
39.3

:
:
:
:

1.8
1.7
4.0
1.7
-6.2

488
335
68.6
229
128
100
68.2
24.7
85.7
40.5
64.3
72.8
76.0
26.7
94.8
48.9
60.3
22.5
76.3
32.2
65.2
21.2
82.3
39.6
43.8
66.7
83.8
33.7
31.5
73.1
22.1
92.0
47.8
57.2
20.4
72.5
31.4
218.6
1.8
1.8
1.0
2.7
7.2
4.7
2.5
7.1
6.2
8.3
17.5
3.4
35.8
4.6
14.2
4.0
:
6.1
4.0
3.8
2.8
6.1
3.8
5.5
29.3
41.4
42.2
39.6

:
:
:
:

2.6
-2.2
2.2
4.7
0.8

500
344
68.9
234
131
103
68.0
24.9
85.7
40.3
63.7
72.8
75.0
26.2
93.9
48.4
60.7
23.2
77.1
32.0
64.6
20.7
82.0
39.2
44.2
64.4
83.7
32.9
31.7
72.1
22.8
90.8
47.0
56.9
18.4
72.8
31.2
222.4
2.7
1.7
1.9
1.7
7.7
4.9
2.8
7.1
6.3
8.2
18.0
4.3
35.9
4.9
16.8
4.4
:
8.3
4.4
3.7
3.5
6.4
3.9
6.2
28.6
41.3
42.1
39.6

:
:
:
:

2.0
-2.6
3.0
4.7
-1.1

2010-2011
2.3 %
2.7 %
0.3 pps
2.3 %
1.9 %
2.9 %
-0.3 pps
0.2 pps
-0.1 pps
-0.2 pps
-0.6 pps
0.0 pps
-1.0 pps
-0.5 pps
-0.9 pps
-0.5 pps
0.5 pps
0.8 pps
0.8 pps
-0.2 pps
-0.6 pps
-0.5 pps
-0.4 pps
-0.3 pps
0.5 pps
-2.3 pps
-0.1 pps
-0.7 pps
0.2 pps
-1.0 pps
0.7 pps
-1.2 pps
-0.8 pps
-0.2 pps
-1.9 pps
0.3 pps
-0.2 pps
1.7 %
0.9 pps
0.0 pps
0.9 pps
-1.0 pps
0.5 pps
0.2 pps
0.3 pps
0.0 pps
0.1 pps
-0.1 pps
0.5 pps
0.9 pps
0.1 pps
0.3 pps
2.6 pps
0.4 pps
: pps
2.2 pps
0.4 pps
-0.1 pps
0.7 pps
0.3 pps
0.1 pps
0.7 pps
-0.7 pps
-0.2 %
-0.2 %
0.0 %

: pps
: pps
: pps
: pps

-0.5 pps
-0.4 pps
0.8 pps
0.0 pps
-1.9 pps

Hungary

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

9907
6800
68.6
4209
2290
1919
61.9
25.6
80.0
34.5
61.9
68.0
69.0
29.3
86.9
43.6
55.1
21.8
73.2
27.3
57.3
21.0
74.6
33.1
27.3
64.8
80.0
56.9
0.4
64.0
24.2
81.3
41.7
50.9
17.8
67.9
26.2
3897.0
0.0
-0.2
0.2
-0.7
11.8
8.0
3.8
7.3
7.7
6.8
3.9
2.5
5.5
7.4
18.0
7.0
4.2
17.5
6.6
2.9
7.4
0.0
7.1
7.7
46.8
40.7
41.5
39.6

:
2.8
-0.2
:

6.4
0.9
9.7
6.8
0.1

9893
6794
68.7
4178
2267
1911
61.5
25.0
80.1
33.1
61.4
70.4
68.3
28.6
87.0
40.5
55.0
21.3
73.3
27.0
56.7
20.0
74.4
31.4
27.2
63.3
79.5
56.2
0.5
63.0
23.1
81.0
38.5
50.6
16.9
67.9
25.7
3849.2
-1.4
-1.2
-1.5
-0.9
11.6
8.0
3.6
7.8
8.6
7.0
4.3
3.0
5.8
7.8
19.9
7.3
5.0
18.9
7.2
2.8
7.9
0.0
7.6
8.1
46.5
40.7
41.5
39.8

-7.1
-2.1
1.7
-0.8

6.8
1.5
7.9
5.1
2.4

9867
6771
68.6
4172
2260
1912
61.6
24.6
80.2
35.0
61.5
73.8
68.2
27.7
86.9
42.6
55.3
21.5
73.6
28.8
55.4
18.1
72.9
32.8
25.7
61.6
78.1
54.9
0.5
61.1
19.9
78.9
39.9
49.9
16.3
66.9
27.0
3751.2
-2.8
-2.5
-3.2
-1.8
11.9
8.0
3.9
8.4
9.0
7.8
5.2
3.6
7.1
10.0
26.5
9.4
6.3
23.4
9.4
4.0
10.1
11.2
10.3
9.7
41.6
40.5
41.1
39.8

-5.0
-5.4
-2.2
-6.4

-1.4
-4.8
2.3
-2.3
-4.2

9852
6769
68.7
4225
2270
1955
62.4
24.9
80.9
37.3
62.4
67.8
68.3
27.7
87.2
43.1
56.7
22.1
74.6
32.4
55.4
18.3
72.5
34.4
25.9
61.1
77.8
55.0
0.4
60.4
20.0
77.9
39.6
50.6
16.6
67.1
30.1
3750.1
0.3
0.0
-1.0
1.2
11.7
7.9
3.8
9.6
10.0
9.2
5.5
3.6
7.6
11.2
26.6
10.7
7.8
25.3
10.6
4.7
11.3
8.4
11.6
10.7
49.3
40.5
41.1
39.8

0.8
-5.9
1.9
-1.1

-2.3
-5.3
-0.7
1.0
0.9

9833
6770
68.9
4247
2292
1954
62.7
24.8
81.3
39.2
62.7
63.6
68.8
27.3
88.3
44.0
56.8
22.1
74.3
35.2
55.8
18.3
73.1
35.8
25.7
61.1
78.4
55.4
0.5
61.2
19.9
79.6
39.8
50.6
16.7
66.6
32.4
3779.0
0.3
0.8
1.7
-0.3
11.4
7.8
3.5
8.9
9.4
8.4
6.4
4.4
8.8
10.9
26.1
10.2
8.7
24.9
10.6
4.5
11.0
8.9
11.0
10.9
47.9
40.3
40.9
39.5

3.7
-2.1
:
3.6

5.2
1.9
5.5
4.2
1.3

Statistical annex

Labour market data

2010-2011
-0.2 %
0.0 %
0.1 pps
0.5 %
1.0 %
0.0 %
0.3 pps
-0.2 pps
0.4 pps
1.9 pps
0.3 pps
-4.3 pps
0.5 pps
-0.4 pps
1.0 pps
0.8 pps
0.1 pps
0.0 pps
-0.3 pps
2.7 pps
0.4 pps
0.0 pps
0.6 pps
1.4 pps
-0.2 pps
0.1 pps
0.7 pps
0.4 pps
0.0 pps
0.8 pps
-0.1 pps
1.7 pps
0.2 pps
0.0 pps
0.1 pps
-0.5 pps
2.3 pps
0.8 %
0.0 pps
0.8 pps
2.7 pps
-1.4 pps
-0.4 pps
-0.1 pps
-0.3 pps
-0.7 pps
-0.6 pps
-0.8 pps
0.9 pps
0.8 pps
1.2 pps
-0.3 pps
-0.5 pps
-0.5 pps
0.9 pps
-0.4 pps
0.0 pps
-0.2 pps
-0.3 pps
0.5 pps
-0.6 pps
0.2 pps
-1.4 pps
-0.5 %
-0.5 %
-0.8 %

2.9 pps
3.8 pps
: pps
4.7 pps

7.5 pps
7.1 pps
6.2 pps
3.2 pps
0.4 pps

135

European Commission

Labour Market Developments in Europe, 2012

Malta
1
2

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

3

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

2007

2008

2009

2010

2011

409
285
69.7
166
112
54
58.4
53.1
69.7
29.5
58.5
57.5
77.6
56.9
94.2
47.5
38.6
48.9
44.0
12.4
54.6
45.7
66.2
28.4
45.6
71.6
85.0
53.2
1.4
73.0
48.2
89.9
46.0
35.7
43.3
41.2
11.7
155.5
3.2
3.2
1.1
8.0
13.8
11.5
2.3
5.1
3.7
7.7
10.6
4.0
24.6
6.5
13.9
5.2
:
8.6
:
:
6.4
:
5.9
7.6
41.9
41.0
41.9
38.6

:
3.2
4.1
:

1.7
-1.1
0.2
5.2
1.2

411
288
70.1
169
113
57
58.8
52.2
70.8
30.5
58.9
56.1
76.9
55.2
93.6
47.9
40.2
49.1
46.8
13.1
55.3
45.8
67.4
29.1
46.6
71.7
84.6
53.8
1.5
72.6
47.8
89.5
46.5
37.4
44.1
44.0
12.5
159.1
2.6
2.3
0.5
6.2
13.1
11.1
2.0
4.2
3.3
5.8
11.1
4.0
25.3
6.0
12.2
5.1
:
8.4
:
:
6.1
:
5.6
6.9
42.2
41.2
42.0
39.1

-6.3
0.1
4.9
-6.1

4.8
1.7
0.9
7.8
1.5

414
290
70.0
171
113
58
59.1
51.3
71.8
29.6
59.0
60.0
76.7
55.1
93.7
47.6
40.7
47.5
48.8
11.7
55.0
43.9
68.0
27.9
45.9
72.8
83.6
53.2
1.7
71.5
46.2
88.9
45.2
37.6
41.4
45.8
11.0
159.3
-0.3
0.1
-0.4
0.8
13.3
11.2
2.1
4.8
3.6
6.8
10.7
4.4
23.2
6.9
14.4
5.6
:
9.1
4.7
:
6.8
:
6.6
7.6
43.5
41.0
41.8
38.9

7.3
-4.0
1.5
-5.8

3.3
0.8
2.1
2.3
-2.3

416
289
69.5
174
114
60
60.3
51.4
73.1
31.5
60.2
64.1
77.8
55.1
94.4
50.3
42.3
47.3
51.0
13.5
56.1
44.8
68.8
30.2
47.4
70.3
83.9
54.2
1.9
72.4
47.8
88.9
47.9
39.2
41.5
47.9
12.8
162.0
2.4
1.7
0.6
4.1
13.8
11.8
2.0
5.6
4.6
7.3
11.7
5.0
24.5
6.9
13.0
6.0
:
9.2
5.2
:
6.9
:
6.9
7.1
46.3
40.5
41.4
38.5

2.2
-2.3
3.6
-1.6

-0.4
-3.2
1.1
1.9
0.1

418
289
69.0
178
115
63
61.6
51.8
74.7
32.7
61.5
64.5
78.5
56.4
94.8
51.5
44.0
46.9
53.6
14.1
57.6
44.7
70.6
31.8
47.4
72.3
86.1
55.9
1.6
73.6
48.6
89.7
50.2
40.9
40.4
50.6
13.8
166.3
2.4
2.7
1.7
4.5
13.0
10.9
2.2
6.5
5.7
7.9
12.4
5.4
25.5
6.5
13.7
5.4
:
9.1
4.4
:
6.5
:
6.2
7.1
46.2
40.3
41.3
38.0

-5.5
-1.1
:
-3.7

0.7
-1.6
1.9
3.4
-0.4

2010-2011
0.7 %
0.1 %
-0.4 pps
2.1 %
1.0 %
4.3 %
1.2 pps
0.5 pps
1.6 pps
1.1 pps
1.3 pps
0.3 pps
0.7 pps
1.3 pps
0.4 pps
1.2 pps
1.8 pps
-0.4 pps
2.7 pps
0.7 pps
1.4 pps
-0.2 pps
1.8 pps
1.6 pps
0.0 pps
2.0 pps
2.2 pps
1.7 pps
-0.3 pps
1.2 pps
0.8 pps
0.8 pps
2.2 pps
1.7 pps
-1.2 pps
2.8 pps
1.0 pps
2.7 %
0.0 pps
1.0 pps
1.1 pps
0.4 pps
-0.7 pps
-0.9 pps
0.2 pps
0.9 pps
1.1 pps
0.6 pps
0.7 pps
0.4 pps
1.0 pps
-0.4 pps
0.7 pps
-0.6 pps
: pps
-0.1 pps
-0.8 pps
: pps
-0.4 pps
: pps
-0.7 pps
0.0 pps
-0.1 pps
-0.5 %
-0.2 %
-1.3 %

-7.7 pps
1.2 pps
: pps
-2.1 pps

1.1 pps
1.7 pps
0.8 pps
1.5 pps
-0.5 pps

136

Netherlands

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

16180
10986
67.9
8622
4680
3942
78.5
72.7
87.6
52.8
79.1
65.1
84.6
73.1
94.0
64.0
72.2
72.4
81.2
41.4
76.0
68.4
85.4
50.9
61.0
79.9
87.5
72.8
2.6
82.2
68.9
92.1
61.5
69.6
67.9
78.7
40.1
8345.1
2.6
2.4
1.7
3.2
12.0
8.0
4.0
17.9
16.4
19.5
46.3
22.5
74.8
3.6
5.9
2.5
3.6
5.3
2.9
1.8
3.1
6.5
3.1
4.1
39.3
41.3
41.9
38.9

:
1.2
3.1
:

3.0
1.6
3.3
6.1
1.3

16190
10970
67.8
8704
4705
3999
79.3
73.2
88.5
54.7
79.8
68.8
85.3
73.7
94.5
65.9
73.3
72.6
82.5
43.5
77.2
69.3
86.8
53.0
62.8
80.9
88.0
73.8
2.8
83.2
69.8
93.0
63.7
71.1
68.8
80.5
42.2
8467.6
1.5
1.5
0.9
2.2
12.1
8.0
4.1
17.9
16.2
19.8
46.8
22.8
75.2
3.1
5.3
2.0
3.2
4.6
2.4
1.6
2.6
6.2
2.8
3.4
34.4
41.1
41.7
38.9

-1.9
1.8
1.2
0.9

3.4
1.1
3.8
4.8
0.3

16223
10970
67.6
8742
4700
4042
79.7
72.8
88.8
56.8
80.2
68.4
85.3
72.7
94.4
67.6
74.1
72.9
83.0
46.0
77.0
68.0
86.3
55.1
62.2
80.9
87.6
73.6
2.7
82.4
67.5
92.0
65.4
71.5
68.4
80.7
44.7
8443.4
-0.7
-0.3
-1.0
0.6
12.4
8.1
4.3
18.0
16.0
20.2
47.7
23.6
75.7
3.7
6.6
2.8
3.1
5.5
3.1
2.1
3.2
7.0
3.7
3.8
24.2
41.0
41.6
38.8

-2.0
-1.8
-2.0
-2.6

2.1
2.4
2.0
1.2
-3.0

16350
11017
67.4
8614
4632
3982
78.2
69.0
87.9
55.9
78.7
67.0
83.7
68.6
93.3
67.3
72.6
69.4
82.4
44.5
74.7
63.0
84.7
53.7
59.2
78.7
86.6
71.7
2.5
80.0
62.6
90.0
64.5
69.3
63.5
79.3
42.8
8226.9
-0.4
-2.6
-2.5
-2.6
13.8
9.2
4.6
18.3
16.9
19.8
48.3
24.2
76.2
4.5
8.7
3.7
4.0
7.4
4.0
2.8
4.3
9.5
4.4
4.5
27.5
41.2
41.8
38.9

-0.7
-2.4
-2.0
-2.9

1.2
0.4
2.0
0.4
2.0

16400
10994
67.0
8614
4609
4005
78.4
68.8
87.5
58.5
78.9
67.2
83.5
67.8
93.0
68.6
73.1
69.9
81.9
48.4
74.9
63.5
84.2
56.1
59.8
78.5
86.7
71.7
2.6
79.8
62.7
89.4
65.8
69.9
64.4
79.0
46.4
8231.7
0.7
0.1
-0.5
0.7
13.7
9.0
4.7
18.2
17.0
19.5
48.5
24.3
76.5
4.4
7.6
3.7
4.2
6.9
4.1
2.8
4.2
9.7
4.5
4.4
33.5
41.4
42.0
39.1

-0.6
-1.8
:
-0.9

1.5
0.5
2.0
1.8
0.3

Statistical annex

Labour market data

2010-2011
0.3 %
-0.2 %
-0.3 pps
0.0 %
-0.5 %
0.6 %
0.2 pps
-0.2 pps
-0.4 pps
2.6 pps
0.2 pps
0.2 pps
-0.2 pps
-0.9 pps
-0.3 pps
1.3 pps
0.5 pps
0.4 pps
-0.4 pps
3.9 pps
0.2 pps
0.5 pps
-0.5 pps
2.4 pps
0.6 pps
-0.2 pps
0.1 pps
0.0 pps
0.1 pps
-0.2 pps
0.1 pps
-0.6 pps
1.3 pps
0.6 pps
0.9 pps
-0.4 pps
3.6 pps
0.1 %
1.1 pps
2.6 pps
2.0 pps
3.3 pps
-0.1 pps
-0.1 pps
0.1 pps
-0.1 pps
0.1 pps
-0.3 pps
0.2 pps
0.1 pps
0.3 pps
-0.1 pps
-1.1 pps
0.0 pps
0.2 pps
-0.5 pps
0.1 pps
0.0 pps
-0.1 pps
0.2 pps
0.1 pps
-0.1 pps
6.0 pps
0.5 %
0.5 %
0.5 %

0.1 pps
0.6 pps
: pps
2.0 pps

0.3 pps
0.1 pps
0.0 pps
1.4 pps
-1.7 pps

137

European Commission

Labour Market Developments in Europe, 2012

Austria

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

138

8191
5551
67.8
4149
2257
1891
74.7
60.8
87.4
39.8
75.3
70.5
81.7
65.0
93.7
51.3
67.8
56.7
81.1
28.9
71.4
55.5
84.0
38.6
51.9
75.9
86.5
64.0
7.4
78.4
59.6
90.6
49.8
64.4
51.5
77.5
28.0
3963.2
1.8
2.1
2.3
1.8
11.7
7.5
4.1
8.9
8.8
9.0
21.8
6.2
40.7
4.4
8.7
3.9
3.0
8.8
3.7
2.5
3.8
9.6
3.9
5.0
26.8
43.1
43.9
41.4

:
2.0
2.2
:

3.1
0.6
3.5
5.3
1.9

8220
5576
67.8
4182
2259
1923
75.0
60.8
87.3
41.9
75.7
69.5
81.4
64.6
93.0
52.8
68.6
56.9
81.5
31.6
72.1
55.9
84.4
41.0
51.0
77.1
86.1
64.5
7.6
78.5
59.5
90.2
51.8
65.8
52.3
78.6
30.8
4019.8
2.0
1.4
0.5
2.6
11.1
7.2
3.9
9.0
8.9
9.1
22.6
6.9
41.1
3.8
8.0
3.4
2.1
8.1
3.3
1.8
3.4
7.8
3.6
4.1
24.2
42.9
43.7
41.1

-1.2
3.4
2.2
1.2

3.2
1.3
4.8
5.5
-0.5

8238
5588
67.8
4207
2252
1955
75.3
60.5
87.7
42.1
75.9
70.3
81.0
64.0
92.6
52.3
69.6
57.0
82.8
32.4
71.6
54.5
84.0
41.1
49.1
76.6
86.1
64.2
7.5
76.9
57.3
88.5
51.0
66.4
51.6
79.5
31.7
4002.4
-0.7
-0.4
-1.8
1.2
10.9
7.1
3.8
9.1
9.1
9.0
23.7
7.4
42.4
4.8
10.0
4.2
2.4
10.1
4.2
2.3
4.2
10.4
5.0
4.6
21.3
42.0
42.8
40.4

-0.7
0.1
-1.2
-3.8

1.7
1.2
4.3
0.8
-3.1

8259
5606
67.9
4209
2256
1953
75.1
58.8
87.7
43.3
75.8
70.1
80.9
63.6
92.5
53.0
69.3
54.1
82.8
34.2
71.7
53.6
84.2
42.4
49.3
76.7
85.1
63.9
7.8
77.1
57.9
88.7
51.6
66.4
49.4
79.7
33.7
4021.1
0.8
0.5
0.6
0.3
11.3
7.3
4.0
9.3
9.8
8.9
24.3
7.8
43.3
4.4
8.8
4.0
2.2
8.7
4.0
2.4
3.9
8.7
4.6
4.2
25.2
41.9
42.7
40.4

-1.2
0.5
1.4
-1.3

1.2
-0.4
1.2
2.0
1.2

8290
5644
68.1
4248
2275
1973
75.3
59.9
88.1
42.9
76.0
70.5
81.1
64.9
92.8
52.6
69.5
55.0
83.4
33.7
72.1
54.9
84.9
41.5
49.9
76.8
85.9
64.0
8.1
77.8
59.8
89.6
50.6
66.5
50.1
80.2
32.9
4069.6
1.7
1.2
1.5
0.9
11.3
7.3
4.0
9.6
9.7
9.5
24.3
7.8
43.4
4.2
8.3
3.8
3.2
8.6
3.6
2.4
3.6
8.4
4.0
4.3
25.9
42.1
42.8
40.6

-0.5
2.0
:
1.2

1.9
1.1
4.0
3.9
1.0

2010-2011
0.4 %
0.7 %
0.2 pps
0.9 %
0.9 %
1.0 %
0.2 pps
1.1 pps
0.4 pps
-0.5 pps
0.2 pps
0.4 pps
0.2 pps
1.3 pps
0.3 pps
-0.4 pps
0.2 pps
0.8 pps
0.6 pps
-0.6 pps
0.4 pps
1.3 pps
0.8 pps
-0.9 pps
0.6 pps
0.1 pps
0.9 pps
0.0 pps
0.4 pps
0.6 pps
1.8 pps
0.9 pps
-1.0 pps
0.2 pps
0.8 pps
0.6 pps
-0.8 pps
1.2 %
0.9 pps
0.7 pps
0.8 pps
0.7 pps
0.1 pps
0.1 pps
0.0 pps
0.3 pps
-0.1 pps
0.6 pps
0.0 pps
0.0 pps
0.1 pps
-0.2 pps
-0.5 pps
-0.2 pps
1.0 pps
-0.1 pps
-0.4 pps
0.0 pps
-0.3 pps
-0.3 pps
-0.6 pps
0.1 pps
0.7 pps
0.5 %
0.2 %
0.5 %

0.7 pps
1.5 pps
: pps
2.5 pps

0.7 pps
1.4 pps
2.8 pps
1.9 pps
-0.2 pps

Poland

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

37277
26299
70.5
16610
9086
7524
63.2
33.0
81.7
31.8
63.2
69.7
70.0
36.5
87.9
44.8
56.5
29.3
75.6
20.6
57.0
25.8
74.9
29.7
24.9
61.0
82.8
56.9
0.1
63.6
29.2
81.1
41.4
50.6
22.4
68.8
19.4
14996.5
4.5
4.6
4.2
5.1
18.7
12.3
6.5
28.2
28.4
27.9
8.5
5.8
11.7
9.6
21.7
8.4
6.8
16.5
10.3
4.7
9.7
:
9.0
10.4
51.4
42.2
43.9
39.9

:
14.5
5.0
:

4.9
0.9
10.5
11.1
2.2

37158
26266
70.7
16765
9170
7595
63.8
33.1
82.5
33.3
63.8
71.4
70.9
36.5
88.8
46.8
57.0
29.6
76.3
21.6
59.2
27.4
77.5
31.6
25.5
63.3
83.7
59.1
0.1
66.3
31.0
84.0
44.1
52.4
23.7
71.0
20.7
15557.4
3.9
3.7
3.8
3.7
18.3
12.0
6.3
26.9
26.2
27.6
7.7
5.1
10.9
7.1
17.3
6.1
5.3
12.8
7.6
3.8
7.2
:
6.4
8.0
33.5
41.8
43.4
39.7

-0.9
16.0
3.4
4.7

8.9
5.6
10.1
15.3
1.2

37196
26338
70.8
17039
9310
7728
64.7
33.8
83.4
34.5
64.7
72.6
71.8
38.1
89.4
47.5
57.8
29.4
77.5
23.2
59.3
26.8
77.6
32.3
24.6
62.7
83.7
59.3
0.1
66.1
30.4
83.7
44.3
52.8
23.2
71.6
21.9
15629.5
0.4
0.5
0.1
1.0
18.3
12.0
6.3
26.4
26.2
26.6
7.7
5.0
10.9
8.2
20.6
7.0
6.3
15.4
8.8
4.4
8.3
:
7.8
8.7
30.3
41.4
42.9
39.4

-4.5
5.5
3.2
-5.2

3.5
-0.2
5.1
3.8
1.2

37368
26527
71.0
17414
9492
7922
65.6
34.5
84.1
36.7
65.6
68.2
72.4
39.1
89.7
48.9
59.0
29.7
78.6
25.9
59.3
26.3
77.1
34.0
23.6
62.0
82.7
59.2
0.1
65.6
30.3
82.6
45.3
53.0
22.1
71.7
24.2
15718.9
0.5
0.6
0.2
1.0
18.5
12.1
6.3
27.2
27.3
27.1
7.6
5.0
10.8
9.6
23.7
8.4
7.1
18.4
10.6
5.0
9.7
:
9.3
10.0
31.1
41.3
42.8
39.3

-2.8
-2.4
2.5
-3.3

4.7
3.3
1.2
5.0
3.4

37503
26618
71.0
17599
9616
7983
66.1
33.6
84.2
39.6
66.1
70.1
73.0
38.7
89.8
51.6
59.4
28.2
78.7
29.1
59.7
24.9
77.2
36.9
23.5
62.2
82.4
59.6
0.1
66.3
29.6
83.0
47.8
53.1
20.1
71.4
27.3
15879.6
1.0
1.0
1.6
0.3
18.5
12.2
6.3
26.9
27.5
26.2
7.3
4.7
10.4
9.7
25.8
8.4
6.9
19.2
10.5
5.3
9.8
:
9.0
10.5
37.2
41.1
42.5
39.2

-0.3
2.9
:
1.9

5.1
1.9
4.5
:
3.3

Statistical annex

Labour market data

2010-2011
0.4 %
0.3 %
0.0 pps
1.1 %
1.3 %
0.8 %
0.5 pps
-0.9 pps
0.1 pps
2.9 pps
0.5 pps
1.9 pps
0.6 pps
-0.3 pps
0.1 pps
2.7 pps
0.4 pps
-1.5 pps
0.0 pps
3.1 pps
0.4 pps
-1.4 pps
0.1 pps
2.8 pps
-0.2 pps
0.2 pps
-0.3 pps
0.4 pps
0.0 pps
0.7 pps
-0.7 pps
0.5 pps
2.6 pps
0.1 pps
-2.1 pps
-0.3 pps
3.0 pps
1.0 %
0.5 pps
0.5 pps
1.4 pps
-0.7 pps
0.0 pps
0.0 pps
0.0 pps
-0.3 pps
0.2 pps
-0.9 pps
-0.3 pps
-0.3 pps
-0.4 pps
0.1 pps
2.1 pps
0.0 pps
-0.2 pps
0.8 pps
-0.1 pps
0.3 pps
0.1 pps
: pps
-0.3 pps
0.5 pps
6.1 pps
-0.5 %
-0.7 %
-0.3 %

2.5 pps
5.3 pps
: pps
5.2 pps

0.4 pps
-1.4 pps
3.3 pps
: pps
-0.1 pps

139

European Commission

Labour Market Developments in Europe, 2012

Portugal

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

140

10604
7135
67.3
5285
2801
2484
74.1
41.9
87.8
54.4
73.8
81.4
79.4
45.3
92.8
63.0
68.8
38.4
82.8
46.7
67.8
34.9
81.0
50.9
65.7
64.8
84.2
65.1
2.7
73.8
39.1
87.2
58.6
61.9
30.6
74.9
44.0
4836.6
0.0
0.1
0.1
0.1
19.0
11.2
7.8
22.4
21.8
23.0
8.8
4.7
13.6
8.9
16.6
7.9
6.5
8.7
8.2
7.6
8.3
12.1
8.0
10.0
47.1
40.5
41.3
39.5

:
0.9
0.7
:

3.6
0.7
5.3
4.2
2.4

10623
7145
67.3
5299
2811
2488
74.2
41.6
88.0
54.4
73.8
82.2
79.5
44.4
93.2
63.0
68.9
38.6
82.9
46.6
68.2
34.7
81.6
50.8
65.8
65.8
84.7
65.0
3.1
74.0
38.5
87.6
58.5
62.5
30.8
75.8
43.9
4872.2
0.5
0.7
0.5
1.0
18.8
10.9
7.9
22.9
21.7
24.2
8.6
4.1
13.9
8.5
16.4
7.4
6.6
8.3
7.9
7.0
7.9
10.9
7.9
9.2
47.4
40.4
41.2
39.4

-0.7
-2.6
2.1
-1.9

3.0
1.4
4.3
2.9
-0.5

10638
7143
67.1
5263
2775
2488
73.7
39.2
87.9
53.9
73.4
79.8
78.5
40.8
92.4
62.7
69.0
37.5
83.4
45.9
66.3
31.3
79.7
49.7
62.9
66.3
84.3
63.4
2.9
71.1
33.2
84.5
57.5
61.6
29.4
74.9
42.7
4735.5
-2.6
-2.8
-3.9
-1.5
18.5
11.1
7.5
22.0
20.8
23.3
8.4
4.3
13.0
10.6
20.0
9.5
7.7
11.0
9.7
6.5
9.7
16.4
10.7
10.5
44.2
40.4
41.2
39.3

-1.7
-8.0
-1.7
-7.4

2.8
1.9
3.3
0.2
-0.3

10636
7114
66.9
5264
2755
2509
74.0
36.7
88.7
54.0
73.7
80.8
78.2
38.6
92.5
61.8
69.9
34.8
84.9
47.0
65.6
28.5
79.2
49.2
61.8
66.1
82.8
62.8
2.8
70.1
30.4
83.9
55.6
61.1
26.5
74.6
43.5
4663.4
-1.5
-1.5
-1.8
-1.2
17.5
10.5
7.0
23.0
22.4
23.7
8.4
4.9
12.3
12.0
22.4
11.1
8.9
12.5
11.4
7.2
11.1
18.9
11.8
12.2
52.3
40.5
41.3
39.5

-3.8
-3.9
-1.3
-3.2

1.4
0.3
1.4
:
3.0

10647
7097
66.7
5261
2762
2499
74.1
38.8
88.4
53.7
73.8
82.1
78.5
41.1
92.3
61.6
69.8
36.4
84.5
46.5
64.2
27.2
77.8
47.9
59.6
65.9
80.9
62.0
2.2
68.1
29.3
81.6
54.2
60.4
24.9
74.1
42.1
4557.4
-1.5
-2.3
-2.9
-1.6
16.5
10.4
6.2
22.2
22.0
22.4
10.1
7.0
13.7
12.9
30.1
12.1
10.8
14.6
13.4
9.3
13.0
22.1
12.7
13.2
48.1
41.3
42.2
40.1

-2.8
-5.6
:
-1.3

-0.9
-1.5
-0.3
:
-0.1

2010-2011
0.1 %
-0.2 %
-0.2 pps
-0.1 %
0.3 %
-0.4 %
0.1 pps
2.1 pps
-0.3 pps
-0.3 pps
0.1 pps
1.3 pps
0.3 pps
2.5 pps
-0.2 pps
-0.2 pps
0.0 pps
1.7 pps
-0.4 pps
-0.5 pps
-1.3 pps
-1.4 pps
-1.4 pps
-1.4 pps
-2.2 pps
-0.2 pps
-1.9 pps
-0.8 pps
-0.6 pps
-1.9 pps
-1.1 pps
-2.3 pps
-1.4 pps
-0.8 pps
-1.7 pps
-0.5 pps
-1.3 pps
-2.3 %
0.0 pps
-0.8 pps
-1.1 pps
-0.4 pps
-1.0 pps
-0.2 pps
-0.8 pps
-0.8 pps
-0.4 pps
-1.3 pps
1.7 pps
2.1 pps
1.4 pps
0.9 pps
7.7 pps
1.0 pps
1.9 pps
2.1 pps
2.0 pps
2.1 pps
1.9 pps
3.2 pps
0.9 pps
1.0 pps
-4.2 pps
2.0 %
2.2 %
1.5 %

1.0 pps
-1.7 pps
: pps
1.9 pps

-2.3 pps
-1.9 pps
-1.7 pps
: pps
-3.1 pps

Romania

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

21551
15046
69.8
9483
5261
4222
63.0
30.5
79.0
42.4
63.0
66.9
70.1
35.9
85.9
52.1
56.0
24.9
72.0
33.9
58.8
24.4
74.6
41.4
40.3
63.9
85.8
58.7
0.1
64.8
28.3
80.6
50.3
52.8
20.2
68.5
33.6
8842.5
0.4
0.1
0.6
-0.6
18.6
13.4
5.1
1.6
1.7
1.5
8.6
8.3
8.9
6.4
20.1
5.8
2.3
8.6
6.9
3.0
6.8
:
7.2
5.4
50.0
41.1
41.8
40.1

:
22.1
0.6
:

22.0
7.5
21.1
22.8
5.9

21517
15042
69.9
9457
5294
4164
62.9
30.4
78.3
44.2
62.9
62.9
70.6
35.9
85.8
55.1
55.2
24.7
70.7
34.7
59.0
24.8
74.4
43.1
41.0
63.5
85.7
59.0
0.1
65.7
29.1
80.9
53.0
52.5
20.2
67.8
34.4
8882.2
0.0
0.4
1.3
-0.6
18.2
13.2
5.0
1.3
1.3
1.1
8.6
8.1
9.3
5.8
18.6
5.1
2.5
8.6
6.0
2.7
6.1
:
6.7
4.7
41.3
41.0
41.7
40.0

:
:
:
:

31.9
14.5
20.4
36.3
7.3

21484
15028
69.9
9485
5313
4172
63.1
30.9
78.5
43.9
63.1
64.7
70.9
35.9
86.3
54.5
55.4
25.8
70.6
34.7
58.6
24.5
73.7
42.6
42.0
62.2
84.1
58.5
0.1
65.2
28.3
80.5
52.3
52.0
20.6
66.9
34.1
8804.7
-2.0
-0.9
-0.7
-1.1
18.4
13.4
5.0
1.0
1.1
1.0
8.5
8.0
9.1
6.9
20.8
6.1
3.0
8.9
7.3
4.4
7.2
:
7.7
5.8
31.6
40.7
41.4
39.9

-0.1
-1.2
0.4
-9.7

-1.9
-5.9
12.0
-6.6
-4.7

21447
14999
69.9
9547
5352
4195
63.6
31.2
79.5
42.5
63.6
0.0
71.5
36.2
87.5
52.7
55.8
26.1
71.4
33.5
58.8
24.3
74.4
41.1
43.0
62.2
82.4
58.8
0.0
65.7
28.1
81.5
50.3
52.0
20.4
67.2
33.0
8822.0
-1.4
0.2
0.5
-0.2
19.5
14.3
5.2
1.1
1.2
1.0
9.7
9.6
9.9
7.3
22.1
6.6
3.3
7.2
8.3
5.4
7.6
:
7.9
6.5
34.9
40.7
41.3
40.0

5.1
-5.5
-3.3
-7.5

7.6
1.5
5.2
3.4
-0.2

21384
14968
70.0
9480
5281
4200
63.3
31.1
79.1
41.5
63.3
:
70.7
35.4
86.5
51.6
56.0
26.7
71.7
32.7
58.5
23.8
74.1
40.0
40.5
62.3
82.1
58.4
0.0
65.0
27.0
80.7
48.9
52.0
20.4
67.4
32.2
8750.0
0.4
-0.8
-1.4
-0.1
17.9
12.9
4.9
1.5
1.8
1.3
9.3
8.7
10.1
7.4
23.7
6.6
3.7
8.6
8.1
5.2
7.7
:
7.9
6.8
41.9
40.7
41.3
40.0

1.9
1.2
:
1.1

3.8
-4.0
7.0
5.1
2.0

Statistical annex

Labour market data

2010-2011
-0.3 %
-0.2 %
0.1 pps
-0.7 %
-1.3 %
0.1 %
-0.3 pps
-0.1 pps
-0.3 pps
-0.9 pps
-0.3 pps
: pps
-0.8 pps
-0.8 pps
-1.0 pps
-1.0 pps
0.2 pps
0.6 pps
0.3 pps
-0.8 pps
-0.4 pps
-0.6 pps
-0.3 pps
-1.1 pps
-2.5 pps
0.1 pps
-0.2 pps
-0.4 pps
0.0 pps
-0.8 pps
-1.1 pps
-0.8 pps
-1.4 pps
0.0 pps
0.0 pps
0.2 pps
-0.7 pps
-0.8 %
1.8 pps
-1.0 pps
-1.9 pps
0.1 pps
-1.6 pps
-1.4 pps
-0.2 pps
0.4 pps
0.6 pps
0.3 pps
-0.4 pps
-0.9 pps
0.2 pps
0.1 pps
1.6 pps
0.0 pps
0.4 pps
1.4 pps
-0.2 pps
-0.2 pps
0.1 pps
: pps
0.0 pps
0.3 pps
7.0 pps
0.0 %
0.0 %
0.0 %

-3.2 pps
6.7 pps
: pps
8.6 pps

-3.9 pps
-5.5 pps
1.8 pps
1.7 pps
2.2 pps

141

European Commission

Labour Market Developments in Europe, 2012

Slovenia

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

142

2015
1412
70.1
1007
547
460
71.3
41.8
89.3
34.6
71.3
72.3
75.8
47.7
91.3
46.7
66.6
35.4
87.3
23.1
67.8
37.6
85.3
33.4
43.1
70.8
87.5
67.2
0.5
72.7
43.2
88.1
45.2
62.6
31.5
82.4
22.2
957.0
3.3
2.2
2.9
1.2
10.0
7.4
2.6
18.4
16.3
20.7
8.1
6.5
10.0
4.9
10.1
4.4
3.3
7.4
5.0
3.3
4.9
0.0
4.0
5.9
45.7
41.8
42.5
40.8

:
10.9
4.0
:

6.2
1.9
5.4
10.1
3.5

2033
1422
70.0
1021
554
466
71.8
42.9
90.1
34.2
71.8
71.6
75.8
47.6
91.6
46.4
67.5
37.4
88.5
22.2
68.6
38.4
86.8
32.8
42.9
72.0
87.5
67.7
0.9
72.7
43.0
88.6
44.7
64.2
33.2
84.8
21.1
975.2
2.6
1.9
1.4
2.5
9.3
6.8
2.5
17.3
15.2
19.6
8.1
6.2
10.4
4.4
10.4
3.8
4.0
6.6
4.4
3.4
4.4
0.0
4.0
4.8
42.2
41.6
42.3
40.6

-2.1
12.2
3.7
-0.5

7.2
3.0
9.5
10.3
0.8

2037
1414
69.4
1016
550
466
71.8
40.9
89.6
36.9
71.9
64.5
75.6
45.3
91.2
48.2
67.9
35.8
88.0
25.6
67.5
35.3
84.9
35.6
41.1
70.0
88.1
66.8
0.7
71.0
39.1
86.4
46.4
63.8
31.0
83.2
24.8
954.8
-1.8
-2.1
-2.9
-1.1
10.1
7.5
2.6
16.2
14.9
17.6
9.5
7.4
12.1
5.9
13.6
5.5
3.6
9.5
6.4
3.2
5.9
14.8
5.9
5.8
30.1
41.3
41.9
40.4

-1.7
-0.9
0.3
-9.5

1.8
-1.1
2.5
-1.1
-6.1

2048
1422
69.4
1017
551
466
71.5
39.9
90.0
36.5
71.5
68.9
75.4
44.4
91.7
47.5
67.4
34.8
88.1
25.5
66.2
34.1
83.7
35.0
39.7
68.6
86.6
65.2
1.0
69.6
37.6
85.2
45.5
62.6
30.0
82.1
24.6
941.5
-2.5
-1.4
-1.3
-1.5
11.6
8.2
3.4
17.1
15.2
19.2
10.3
7.4
13.6
7.3
14.7
7.3
4.0
12.5
7.6
4.3
7.3
13.8
7.5
7.1
43.3
41.2
41.8
40.4

-2.0
-9.5
-0.6
-6.2

4.4
5.4
2.4
1.2
3.5

2051
1421
69.2
998
540
459
70.3
37.4
90.1
33.3
70.2
73.2
73.9
41.9
91.8
42.7
66.4
32.3
88.4
23.7
64.4
31.5
83.1
31.2
35.3
66.4
85.5
63.1
1.3
67.7
35.7
84.8
39.5
60.9
26.9
81.3
22.8
914.8
-1.7
-2.8
-2.9
-2.7
11.9
8.4
3.5
18.0
16.4
19.7
9.5
7.1
12.2
8.2
15.7
7.8
6.3
14.4
8.7
5.0
8.3
11.9
8.2
8.2
44.2
40.7
41.3
40.0

-2.5
-11.4
:
-0.2

1.7
1.2
2.1
-0.6
2.2

2010-2011
0.2 %
-0.1 %
-0.2 pps
-1.8 %
-2.1 %
-1.5 %
-1.2 pps
-2.5 pps
0.2 pps
-3.2 pps
-1.3 pps
4.3 pps
-1.5 pps
-2.5 pps
0.1 pps
-4.9 pps
-0.9 pps
-2.5 pps
0.3 pps
-1.8 pps
-1.8 pps
-2.6 pps
-0.6 pps
-3.8 pps
-4.3 pps
-2.2 pps
-1.1 pps
-2.2 pps
0.4 pps
-1.9 pps
-1.9 pps
-0.4 pps
-6.0 pps
-1.6 pps
-3.1 pps
-0.7 pps
-1.8 pps
-2.8 %
0.8 pps
-1.4 pps
-1.6 pps
-1.2 pps
0.3 pps
0.2 pps
0.1 pps
0.9 pps
1.2 pps
0.5 pps
-0.8 pps
-0.3 pps
-1.4 pps
0.9 pps
1.0 pps
0.5 pps
2.3 pps
1.9 pps
1.1 pps
0.7 pps
1.0 pps
-1.9 pps
0.7 pps
1.1 pps
0.9 pps
-1.2 %
-1.2 %
-1.0 %

-0.5 pps
-1.9 pps
: pps
6.0 pps

-2.7 pps
-4.3 pps
-0.3 pps
-1.7 pps
-1.3 pps

Slovak Republic

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

5391
3873
71.8
2646
1464
1182
68.3
34.6
86.9
38.8
68.3
71.2
75.9
38.9
93.1
57.0
60.8
30.2
80.7
23.3
60.7
27.6
78.0
35.6
14.7
69.0
83.1
60.6
0.1
68.4
30.9
85.0
52.6
53.0
24.1
71.0
21.2
2350.5
2.1
2.4
2.4
2.4
12.8
9.6
3.1
5.0
4.9
5.1
2.5
1.0
4.3
11.2
20.3
10.2
8.2
45.1
9.4
4.1
11.2
:
10.0
12.8
74.2
40.8
41.7
39.5

:
5.1
2.6
:

8.7
7.5
7.3
10.6
8.2

5396
3892
72.1
2679
1481
1198
68.8
32.4
87.8
41.9
68.8
77.6
76.4
37.8
93.4
59.9
61.3
26.8
82.1
26.4
62.3
26.2
80.1
39.2
15.9
70.1
83.9
62.1
0.1
70.0
30.8
86.4
56.7
54.6
21.5
73.7
24.2
2423.4
3.2
3.1
2.9
3.3
13.6
10.3
3.3
4.5
4.4
4.7
2.5
1.3
4.1
9.6
19.0
8.8
6.4
39.6
8.1
3.6
9.6
:
8.4
11.0
69.5
40.4
41.3
39.1

-1.1
9.3
3.6
4.1

7.0
4.0
5.4
7.5
2.4

5409
3917
72.4
2680
1491
1189
68.4
31.4
87.2
42.8
68.4
74.2
76.3
37.1
93.6
58.7
60.6
25.4
80.7
29.0
60.2
22.8
77.8
39.5
14.3
67.1
80.3
60.1
0.1
67.6
26.8
84.2
54.9
52.8
18.7
71.2
26.1
2356.6
-2.0
-2.8
-2.7
-2.8
15.5
11.3
4.2
4.3
4.5
4.0
3.4
2.6
4.5
12.1
27.3
10.9
7.7
41.7
11.5
4.3
12.1
:
11.5
12.9
54.0
39.9
40.7
38.8

-7.1
3.9
1.1
-11.0

3.6
4.9
3.8
1.1
-3.0

5422
3926
72.4
2696
1491
1205
68.7
31.1
86.9
45.1
68.7
59.5
76.1
36.4
92.9
59.7
61.3
25.5
80.9
32.2
58.8
20.6
75.8
40.5
14.3
65.1
78.0
58.6
0.1
65.2
23.8
81.4
54.0
52.3
17.4
70.1
28.7
2307.2
-1.5
-2.1
-3.2
-0.7
15.8
11.7
4.1
5.6
5.5
5.8
3.8
2.6
5.2
14.5
33.6
13.0
10.1
44.3
14.1
5.8
14.5
:
14.3
14.7
64.0
40.3
41.1
39.2

-9.1
-2.2
0.2
-4.2

4.4
3.9
1.0
2.6
5.8

5435
3932
72.3
2707
1508
1200
68.9
30.2
87.0
46.0
68.9
72.1
76.7
37.3
93.5
58.9
61.0
22.8
80.4
34.6
59.5
20.2
76.5
41.4
14.9
65.5
76.8
59.4
0.1
66.3
25.0
82.6
52.6
52.7
15.1
70.4
31.5
2339.3
1.8
1.4
1.9
0.8
15.8
11.6
4.3
6.5
6.2
6.7
3.9
2.6
5.6
13.6
33.2
12.2
10.0
42.4
13.4
5.8
13.6
:
13.6
13.6
67.8
40.4
41.2
39.2

3.4
-1.8
:
3.6

0.9
-0.7
5.5
4.5
1.5

Statistical annex

Labour market data

2010-2011
0.2 %
0.1 %
-0.1 pps
0.4 %
1.1 %
-0.5 %
0.2 pps
-0.9 pps
0.1 pps
0.9 pps
0.2 pps
12.6 pps
0.7 pps
0.9 pps
0.6 pps
-0.8 pps
-0.3 pps
-2.8 pps
-0.5 pps
2.4 pps
0.7 pps
-0.5 pps
0.8 pps
0.9 pps
0.6 pps
0.4 pps
-1.2 pps
0.8 pps
0.0 pps
1.1 pps
1.2 pps
1.2 pps
-1.4 pps
0.4 pps
-2.3 pps
0.3 pps
2.8 pps
1.4 %
3.3 pps
3.5 pps
5.1 pps
1.5 pps
0.0 pps
-0.2 pps
0.2 pps
0.9 pps
0.7 pps
0.9 pps
0.1 pps
0.0 pps
0.4 pps
-0.9 pps
-0.4 pps
-0.8 pps
-0.1 pps
-1.9 pps
-0.7 pps
0.0 pps
-0.9 pps
: pps
-0.7 pps
-1.1 pps
3.8 pps
0.2 %
0.2 %
0.0 %

12.5 pps
0.4 pps
: pps
7.8 pps

-3.5 pps
-4.7 pps
4.5 pps
1.9 pps
-4.3 pps

143

European Commission

Labour Market Developments in Europe, 2012

Finland

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

144

5266
3497
66.4
2642
1358
1284
75.6
53.4
88.0
58.8
75.7
70.5
77.2
53.2
90.4
59.1
73.8
53.6
85.6
58.4
70.3
44.6
83.3
55.0
46.4
73.9
85.1
69.2
1.1
72.1
44.5
86.0
55.1
68.5
44.7
80.6
55.0
2458.5
2.2
1.8
1.5
2.1
11.5
7.9
3.7
15.9
12.3
19.4
13.4
8.3
18.8
6.9
16.5
5.3
6.3
13.0
7.1
3.6
6.8
16.7
6.5
7.2
22.8
39.2
40.7
37.4

:
7.1
2.2
:

3.7
0.6
6.3
6.1
3.1

5289
3514
66.4
2669
1376
1293
76.0
53.5
88.6
59.7
76.0
72.3
77.9
53.4
91.2
60.6
73.9
53.5
85.9
58.8
71.1
44.7
84.3
56.5
46.4
75.1
85.6
69.8
1.3
73.1
44.3
87.3
57.1
69.0
45.0
81.2
55.9
2497.2
2.6
1.6
1.9
1.2
11.8
8.0
3.8
14.9
11.1
18.7
12.7
7.9
17.8
6.4
16.5
4.9
5.4
12.8
6.4
3.3
6.2
15.8
6.1
6.7
18.4
39.2
40.6
37.3

-1.0
3.6
3.5
2.1

4.4
1.4
4.1
7.1
-2.2

5317
3527
66.3
2644
1355
1289
75.0
50.4
88.2
59.1
75.0
71.7
76.4
49.7
90.6
58.7
73.5
51.2
85.7
59.5
68.7
39.6
82.4
55.5
43.0
71.9
84.4
67.4
1.3
69.5
37.7
84.3
54.6
67.9
41.5
80.5
56.3
2423.3
-2.6
-3.0
-4.5
-1.3
12.6
8.5
4.1
14.5
10.5
18.3
13.3
8.3
18.5
8.2
21.5
6.7
6.2
15.3
9.2
4.1
8.1
18.0
8.9
7.6
16.7
38.6
40.1
36.8

-0.7
-5.7
-3.2
-7.4

2.3
0.8
4.3
-0.5
-6.1

5343
3537
66.2
2634
1360
1274
74.5
49.4
87.5
60.2
74.6
69.3
76.4
49.4
90.5
60.1
72.5
49.3
84.4
60.3
68.1
38.8
81.6
56.3
41.1
71.2
84.0
66.8
1.3
69.4
37.7
83.9
55.6
66.9
40.0
79.2
56.9
2410.1
-0.1
-0.5
0.1
-1.2
12.2
8.3
4.0
15.4
12.3
18.4
13.9
8.9
19.0
8.4
21.4
6.8
6.5
16.7
9.0
4.5
8.2
19.6
9.1
7.6
24.0
39.0
40.4
37.2

0.7
1.9
0.7
-3.9

1.8
1.3
0.6
2.5
3.4

5365
3518
65.6
2637
1366
1271
74.9
50.5
87.6
60.9
75.2
67.6
77.2
50.5
90.9
61.4
72.7
50.5
84.3
60.4
69.0
40.4
82.3
57.0
41.2
72.2
84.3
67.5
1.5
70.6
39.5
84.8
56.8
67.4
41.2
79.6
57.2
2428.5
1.1
0.8
1.2
0.3
12.2
8.3
3.9
15.5
12.6
18.4
14.1
9.4
19.0
7.8
20.1
6.2
6.4
16.7
8.3
4.0
7.7
16.8
8.4
7.1
22.2
39.0
40.5
37.1

-3.9
2.6
:
-0.6

3.4
0.3
2.6
4.5
1.6

2010-2011
0.4 %
-0.5 %
-0.6 pps
0.1 %
0.5 %
-0.3 %
0.5 pps
1.1 pps
0.1 pps
0.7 pps
0.5 pps
-1.7 pps
0.8 pps
1.1 pps
0.4 pps
1.3 pps
0.2 pps
1.2 pps
-0.1 pps
0.1 pps
0.9 pps
1.6 pps
0.7 pps
0.7 pps
0.1 pps
1.0 pps
0.2 pps
0.7 pps
0.1 pps
1.2 pps
1.9 pps
1.0 pps
1.1 pps
0.5 pps
1.3 pps
0.4 pps
0.3 pps
0.8 %
1.2 pps
1.3 pps
1.1 pps
1.5 pps
0.0 pps
0.1 pps
-0.1 pps
0.1 pps
0.3 pps
0.0 pps
0.2 pps
0.5 pps
0.0 pps
-0.6 pps
-1.3 pps
-0.6 pps
-0.1 pps
0.0 pps
-0.7 pps
-0.5 pps
-0.5 pps
-2.8 pps
-0.7 pps
-0.5 pps
-1.8 pps
0.0 %
0.2 %
-0.3 %

-4.6 pps
0.7 pps
: pps
3.3 pps

1.6 pps
-1.1 pps
2.0 pps
1.9 pps
-1.8 pps

Sweden

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

9147
6002
65.6
4750
2482
2268
79.1
52.2
90.0
72.8
79.7
68.6
81.4
51.8
92.9
76.2
76.8
52.7
87.1
69.4
74.2
42.2
86.1
70.0
56.8
81.4
87.6
71.2
3.0
76.5
42.0
89.1
72.9
71.8
42.3
83.0
67.0
4453.3
2.3
2.3
2.3
2.3
9.6
7.1
2.4
17.2
14.7
19.7
24.2
10.5
39.5
6.1
19.3
4.6
4.0
11.9
5.2
3.6
5.9
13.0
5.9
6.5
13.9
39.6
40.5
38.1

:
7.6
2.1
:

5.2
2.4
3.4
7.0
1.0

9203
6046
65.7
4797
2508
2289
79.3
52.8
90.4
72.8
79.8
71.8
81.7
52.6
93.1
76.5
76.9
53.1
87.6
69.0
74.3
42.2
86.5
70.1
55.9
81.6
88.1
71.1
3.2
76.7
42.2
89.4
73.4
71.8
42.1
83.5
66.7
4493.8
0.9
0.9
1.0
0.8
9.4
6.9
2.5
15.8
13.2
18.5
25.7
11.9
40.9
6.2
20.2
4.5
3.8
12.6
5.0
3.4
5.9
14.3
5.9
6.6
12.7
39.6
40.5
38.2

1.5
7.2
2.3
0.3

1.5
-1.6
2.4
5.5
-1.5

9297
6080
65.4
4799
2513
2286
78.9
51.0
90.0
73.9
79.4
72.5
81.4
51.1
92.8
77.8
76.4
51.0
87.1
69.9
72.2
38.3
84.5
70.0
50.1
78.7
87.0
68.8
3.3
74.2
37.6
86.9
73.2
70.2
38.9
81.9
66.7
4391.4
-2.4
-2.3
-2.8
-1.7
9.6
7.0
2.6
14.9
12.6
17.3
26.0
12.6
40.5
8.3
25.0
6.5
5.3
16.7
7.7
4.5
8.0
16.8
8.6
8.0
13.2
39.2
40.0
37.9

-0.5
-1.0
-1.7
-9.8

1.6
-0.4
3.7
0.1
-2.7

9363
6101
65.2
4852
2550
2302
79.5
51.7
90.6
74.5
80.1
71.0
82.3
52.1
93.6
79.1
76.7
51.4
87.5
69.8
72.7
38.7
85.0
70.5
46.6
78.9
87.1
69.2
3.4
75.1
38.2
88.0
74.2
70.3
39.2
82.0
66.8
4437.5
1.1
1.0
1.6
0.4
9.8
7.1
2.7
15.4
13.5
17.3
25.3
12.2
39.7
8.4
25.2
6.4
5.4
18.2
7.6
4.5
7.9
18.8
8.5
8.2
17.8
39.9
40.7
38.5

1.2
4.0
1.8
-1.5

3.0
2.0
2.0
3.1
5.0

9419
6113
64.9
4906
2569
2337
80.2
52.6
91.0
75.9
81.0
70.3
82.7
52.6
93.8
79.9
77.7
52.5
88.1
71.8
74.1
40.5
86.0
72.3
47.5
80.1
86.9
70.5
3.5
76.3
40.1
88.8
75.7
71.8
41.0
83.2
68.9
4529.4
2.2
2.1
1.8
2.4
9.4
6.8
2.6
15.9
14.0
17.9
24.7
12.0
38.7
7.5
22.9
5.7
4.7
16.7
6.9
4.2
6.9
20.7
7.6
7.5
18.6
39.8
40.5
38.5

-0.8
5.1
:
0.9

0.8
-0.1
2.7
5.7
1.7

Statistical annex

Labour market data

2010-2011
0.6 %
0.2 %
-0.3 pps
1.1 %
0.7 %
1.5 %
0.7 pps
0.8 pps
0.4 pps
1.4 pps
0.8 pps
-0.7 pps
0.4 pps
0.5 pps
0.2 pps
0.8 pps
1.1 pps
1.2 pps
0.6 pps
2.0 pps
1.4 pps
1.8 pps
1.0 pps
1.8 pps
0.9 pps
1.2 pps
-0.2 pps
1.3 pps
0.1 pps
1.2 pps
1.9 pps
0.8 pps
1.5 pps
1.6 pps
1.8 pps
1.2 pps
2.1 pps
2.1 %
1.1 pps
1.0 pps
0.2 pps
1.9 pps
-0.4 pps
-0.3 pps
-0.2 pps
0.5 pps
0.5 pps
0.6 pps
-0.6 pps
-0.2 pps
-1.0 pps
-0.9 pps
-2.3 pps
-0.7 pps
-0.7 pps
-1.5 pps
-0.7 pps
-0.3 pps
-1.0 pps
1.9 pps
-0.9 pps
-0.7 pps
0.8 pps
-0.3 %
-0.5 %
0.0 %

-2.0 pps
1.1 pps
: pps
2.4 pps

-2.2 pps
-2.0 pps
0.7 pps
2.6 pps
-3.3 pps

145

European Commission

Labour Market Developments in Europe, 2012

United Kingdom

2007

2008

2009

2010

2011

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

146

59862
39845
66.6
30089
16260
13829
75.5
61.7
84.5
59.3
75.8
72.5
82.2
64.6
91.6
69.0
69.0
58.7
77.6
50.0
71.5
52.9
81.3
57.4
60.1
76.7
87.2
66.2
5.3
77.5
54.4
88.2
66.3
65.5
51.4
74.6
48.9
28477.7
0.7
0.6
0.8
0.4
12.6
9.1
3.5
5.7
5.1
6.4
24.2
9.4
41.4
5.3
14.3
3.9
3.2
9.5
5.2
2.6
5.2
7.7
5.6
5.0
23.7
41.3
42.7
38.6

:
:
:
:

5.2
2.9
4.6
6.1
2.9

60305
40094
66.5
30409
16416
13993
75.8
61.7
84.9
59.9
76.1
73.3
82.4
64.8
91.6
69.9
69.4
58.4
78.2
50.2
71.5
52.4
81.4
58.0
56.2
75.1
85.3
65.8
5.7
77.3
53.8
87.7
67.3
65.8
51.0
75.2
49.0
28670.8
0.7
0.7
0.4
1.1
12.5
9.1
3.5
5.3
4.7
5.9
24.2
9.8
41.0
5.6
15.0
4.3
3.1
10.4
5.6
2.8
5.6
7.0
6.1
5.1
24.1
41.0
42.4
38.4

:
:
:
:

1.5
-1.5
4.2
2.5
-1.7

60734
40318
66.4
30525
16433
14093
75.7
59.7
85.1
60.3
76.0
73.1
82.0
62.0
91.7
70.3
69.5
57.4
78.7
50.6
69.9
48.4
80.2
57.5
54.1
72.4
84.2
64.2
5.7
74.8
48.5
85.7
66.2
65.0
48.2
74.7
49.2
28183.5
-1.6
-1.7
-2.5
-0.7
12.7
9.1
3.7
5.5
5.1
5.9
25.0
10.4
41.7
7.6
19.1
6.0
4.6
13.3
7.9
4.0
7.6
8.9
8.6
6.4
24.5
41.0
42.3
38.6

:
:
:
:

2.7
1.4
0.3
-0.2
-2.4

61099
40441
66.2
30529
16433
14096
75.5
59.2
85.0
59.9
75.7
73.6
81.7
61.8
91.4
69.1
69.4
56.4
78.6
51.1
69.5
47.6
79.8
57.1
52.3
71.5
84.0
63.7
5.7
74.5
48.5
85.4
65.0
64.6
46.6
74.3
49.5
28109.6
0.2
-0.3
-0.1
-0.5
13.0
9.1
3.8
6.0
5.6
6.4
25.7
11.0
42.4
7.8
19.6
6.3
4.7
14.2
8.3
4.1
7.8
9.0
8.6
6.8
32.6
41.1
42.4
38.6

:
:
:
:

2.7
0.0
2.1
1.1
1.6

61510
40599
66.0
30721
16512
14209
75.7
58.8
85.3
59.7
75.8
74.3
81.7
61.5
91.7
68.5
69.7
56.0
79.1
51.3
69.5
46.4
80.1
56.7
52.6
71.7
82.6
63.2
6.2
74.5
47.0
85.9
64.2
64.5
45.7
74.5
49.6
28207.3
0.4
0.3
0.4
0.3
13.1
9.2
3.9
6.0
5.6
6.4
25.5
11.0
42.2
8.0
21.1
6.4
5.0
14.6
8.7
4.4
8.1
9.5
8.7
7.3
33.4
41.1
42.4
38.6

:
:
:
:

2.0
-0.6
1.6
2.5
0.2

2010-2011
0.7 %
0.4 %
-0.2 pps
0.6 %
0.5 %
0.8 %
0.2 pps
-0.4 pps
0.4 pps
-0.2 pps
0.1 pps
0.6 pps
0.0 pps
-0.4 pps
0.2 pps
-0.6 pps
0.3 pps
-0.4 pps
0.5 pps
0.2 pps
0.0 pps
-1.2 pps
0.3 pps
-0.3 pps
0.3 pps
0.2 pps
-1.4 pps
-0.5 pps
0.6 pps
0.0 pps
-1.5 pps
0.5 pps
-0.8 pps
0.0 pps
-0.9 pps
0.1 pps
0.1 pps
0.3 %
0.2 pps
0.6 pps
0.5 pps
0.8 pps
0.1 pps
0.1 pps
0.0 pps
0.0 pps
0.0 pps
0.0 pps
-0.2 pps
0.0 pps
-0.2 pps
0.2 pps
1.5 pps
0.1 pps
0.3 pps
0.4 pps
0.4 pps
0.3 pps
0.3 pps
0.5 pps
0.1 pps
0.5 pps
0.8 pps
0.0 %
0.0 %
0.0 %

: pps
: pps
: pps
: pps

-0.7 pps
-0.6 pps
-0.5 pps
1.5 pps
-1.4 pps

Statistical annex

Labour market data

European Union (27 countries)
- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

1
2

3

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

2007

488555
329256
67.4
231817
127582
104235
70.4
44.2
84.3
47.2
70.4
70.9
77.7
47.6
91.9
57.0
63.2
40.6
76.7
38.0
65.3
37.3
79.0
44.6
48.6
70.1
83.7
61.2
4.1
72.5
40.4
86.8
53.9
58.2
34.2
71.2
35.9
215063.3
1.8
1.8
1.6
2.1
14.4
10.1
4.3
14.6
13.9
15.3
17.6
7.0
30.8
7.2
15.5
6.4
5.5
10.9
7.0
4.0
6.9
12.0
6.6
7.9
42.7
41.2
42.3
39.2

:
5.3
2.1
:

3.3
0.7
3.5
5.7
1.4

2008

490665
330447
67.3
233946
128462
105484
70.8
44.3
84.6
48.1
70.7
71.7
77.9
47.8
92.0
57.9
63.7
40.8
77.3
38.8
65.8
37.4
79.5
45.6
48.1
70.5
83.7
61.4
4.4
72.7
40.3
86.9
55.0
58.9
34.4
72.0
36.8
217401.5
0.9
1.1
0.7
1.6
14.2
9.9
4.3
14.1
13.3
15.0
17.6
7.0
30.6
7.1
15.6
6.3
5.1
11.6
6.5
3.9
6.7
12.2
6.7
7.6
36.9
41.0
42.1
39.1

-1.6
0.3
1.8
0.1

0.6
0.8
4.0
1.8
-0.6

2009

492290
330935
67.2
234740
128374
106366
70.9
43.7
84.7
49.1
70.9
71.7
77.8
46.9
91.8
58.6
64.1
40.4
77.7
40.2
64.5
35.0
78.0
46.0
46.1
68.9
82.8
60.2
4.3
70.7
37.1
84.6
54.8
58.4
32.9
71.4
37.8
213526.3
-1.8
-1.8
-2.7
-0.7
14.3
10.0
4.4
13.6
12.7
14.5
18.1
7.4
31.0
9.0
19.9
8.2
6.3
14.9
8.4
5.0
8.5
16.4
9.1
9.0
33.1
40.7
41.7
38.9

-1.9
-5.4
-1.5
-6.3

-1.3
0.7
2.5
-3.3
-2.6

2010

493724
331176
67.1
235240
128286
106954
71.0
43.0
84.9
49.7
71.0
71.7
77.6
46.1
91.7
58.9
64.4
39.7
78.1
41.2
64.1
34.0
77.6
46.3
45.1
68.4
82.3
59.7
4.4
70.1
36.2
83.9
54.6
58.2
31.8
71.3
38.6
212405.0
-0.5
-0.5
-0.8
-0.2
14.5
10.1
4.5
13.9
13.3
14.6
18.6
7.9
31.4
9.7
20.9
8.9
6.8
16.2
9.1
5.5
9.1
16.8
9.7
9.6
39.9
40.8
41.9
39.1

0.1
-4.1
0.0
-3.5

3.1
1.1
1.7
2.7
2.6

2011

495163
331418
66.9
236015
128304
107711
71.2
42.7
85.0
50.9
71.2
71.8
77.6
45.7
91.6
59.5
64.9
39.6
78.4
42.8
64.3
33.6
77.6
47.4
44.8
68.4
82.0
59.8
4.5
70.1
35.7
83.9
55.2
58.5
31.4
71.4
40.2
213047.3
0.3
0.3
0.1
0.5
14.4
10.0
4.4
14.0
13.6
14.6
18.8
8.1
31.6
9.7
21.3
9.0
6.8
16.7
9.0
5.6
9.1
16.8
9.6
9.8
42.9
40.8
41.9
39.1

-1.2
-3.0
:
0.2

2.1
0.8
2.7
:
1.3

2010-2011
0.3 %
0.1 %
-0.1 pps
0.3 %
0.0 %
0.7 %
0.2 pps
-0.3 pps
0.1 pps
1.2 pps
0.2 pps
0.1 pps
-0.1 pps
-0.4 pps
-0.1 pps
0.6 pps
0.4 pps
-0.1 pps
0.2 pps
1.7 pps
0.1 pps
-0.4 pps
0.0 pps
1.1 pps
-0.4 pps
0.0 pps
-0.2 pps
0.0 pps
0.1 pps
0.0 pps
-0.4 pps
0.0 pps
0.6 pps
0.3 pps
-0.4 pps
0.1 pps
1.6 pps
0.3 %
0.8 pps
0.8 pps
0.9 pps
0.7 pps
-0.1 pps
-0.1 pps
0.0 pps
0.1 pps
0.3 pps
0.0 pps
0.2 pps
0.2 pps
0.2 pps
0.0 pps
0.4 pps
0.1 pps
0.0 pps
0.5 pps
-0.1 pps
0.1 pps
0.0 pps
0.0 pps
-0.1 pps
0.2 pps
3.0 pps
0.0 %
0.0 %
0.0 %

-1.3 pps
1.1 pps
: pps
3.7 pps

-1.0 pps
-0.3 pps
1.0 pps
: pps
-1.3 pps

147

European Commission

Labour Market Developments in Europe, 2012

Euro Area

1
2

3

- Population (total, 1000 pers.)
- Population (working age:15-64, 1000 pers.)

- Labour force (15-64, 1000 pers.)

4

- Activity rate (% of population 15-64)

5

-

 Employment rate (% of population 15-64)

(% of total population)

Male

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

Young (15-24)

Prime age (25-54)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Young (15-24)

Prime age (25-54)

Older (55-64)

Female

Young (15-24)

Prime age (25-54)

Older (55-64)

6
7

- Employed persons (15-64, 1000 pers.)
- Employment growth (%, National accounts)

Employment growth (%, 15-64, LFS)

8

- Self employed (% of total employment )

9

- Temporary employment (% of total employment)

10

- Part-time (% of total employment )

11

- Unemployment rate (harmonised:15-74)

Male

Female

Male

Female

Male

Female

Male

Female

Young (15-24)

Prime age (25-49)

Older (55-64)

Low-skilled (15-64)

Medium-skilled (15-64)

High-skilled (15-64)

Nationals (15-64)

Non-nationals (15-64)

Male

Female

12
13

- Long-term unemployment rate (% of total unemployment)
- Worked hours (average actual weekly hours)

14

- Sectoral employment growth (% change)

Male

Female

Agriculture

Building and construction

Services

Manufacturing industry

15

-

Indicator board on wage developments (% change)

Compensation per employee

Real compensation per employee based on GDP

Hourly labour costs (Eurostat labour cost index)

Wage and salaries

Labour productivity (GDP/person employed)

148

2007

321714
215245
66.9
152508
84598
67910
70.9
44.4
84.7
46.1
70.9
70.7
78.6
47.8
93.0
55.6
63.1
40.9
76.3
37.0
65.5
37.7
79.0
43.2
50.2
70.8
82.6
60.4
5.0
73.3
41.0
87.7
52.3
57.7
34.3
70.3
34.5
140992.1
1.8
2.0
1.5
2.5
14.6
10.2
4.4
16.6
15.8
17.7
18.9
6.8
34.2
7.6
15.1
6.8
6.3
10.8
7.1
4.5
7.1
12.9
6.7
8.7
44.3
41.1
42.2
39.1

:
3.8
2.1
:

2.6
0.3
2.7
4.8
1.2

2008

323405
216137
66.8
154015
85095
68919
71.3
44.4
85.0
47.1
71.3
71.4
78.7
47.8
93.0
56.5
63.8
41.0
77.0
38.1
65.9
37.5
79.3
44.3
49.9
71.2
83.0
60.4
5.4
73.3
40.5
87.4
53.3
58.4
34.4
71.2
35.7
142335.2
0.8
1.0
0.3
1.7
14.3
10.0
4.4
16.3
15.2
17.4
18.9
6.8
34.1
7.6
15.6
6.9
5.9
11.7
6.9
4.3
7.0
13.2
7.0
8.5
39.3
40.9
42.0
39.0

-1.8
-2.2
1.6
0.2

3.3
1.4
3.5
4.3
-0.4

2009

324479
216363
66.7
154404
84853
69551
71.4
43.6
85.1
48.4
71.4
71.4
78.4
46.7
92.6
57.5
64.3
40.5
77.5
39.8
64.5
35.0
77.7
45.1
47.7
69.9
82.1
59.2
5.3
71.1
37.1
84.9
53.5
58.0
32.8
70.6
37.1
139641.4
-1.9
-1.9
-2.9
-0.6
14.4
10.0
4.4
15.4
14.2
16.6
19.5
7.3
34.4
9.6
19.8
8.9
6.9
15.1
8.6
5.5
8.7
17.8
9.4
9.8
35.6
40.5
41.5
38.7

-2.2
-6.6
-1.7
-5.6

1.4
0.8
2.7
-0.5
-2.6

2010

325409
216443
66.5
154509
84595
69915
71.4
42.5
85.2
49.4
71.4
71.4
78.2
45.4
92.4
58.3
64.6
39.4
77.9
41.0
64.2
33.7
77.3
45.8
46.8
69.5
81.6
58.8
5.3
70.4
35.9
84.1
53.8
57.9
31.5
70.5
38.1
138854.5
-0.5
-0.6
-1.0
-0.1
14.5
10.1
4.4
15.6
14.8
16.5
19.9
7.6
34.8
10.1
20.6
9.6
7.4
16.5
8.9
5.9
9.3
18.2
10.0
10.3
42.5
40.8
41.8
38.9

-1.2
-3.8
0.0
-3.4

1.6
1.0
1.5
1.4
2.5

2011

326437
216676
66.4
155024
84523
70501
71.5
42.2
85.2
50.8
71.6
71.4
78.1
44.9
92.2
59.1
65.0
39.4
78.2
43.0
64.3
33.5
77.2
47.1
46.4
69.3
81.6
58.8
5.4
70.3
35.6
83.9
54.6
58.2
31.3
70.6
40.0
139231.3
0.2
0.3
-0.1
0.7
14.4
10.0
4.4
15.8
15.1
16.6
20.4
8.1
35.2
10.1
20.6
9.7
7.3
17.0
8.8
6.1
9.4
18.2
9.9
10.5
45.2
40.8
41.8
39.0

-2.4
-3.9
:
-0.1

2.2
1.0
2.8
:
1.3

2010-2011
0.3 %
0.1 %
-0.1 pps
0.3 %
-0.1 %
0.8 %
0.2 pps
-0.3 pps
0.0 pps
1.4 pps
0.2 pps
0.0 pps
-0.1 pps
-0.5 pps
-0.2 pps
0.8 pps
0.4 pps
0.0 pps
0.2 pps
2.0 pps
0.1 pps
-0.3 pps
-0.1 pps
1.3 pps
-0.4 pps
-0.2 pps
0.0 pps
0.0 pps
0.1 pps
-0.1 pps
-0.3 pps
-0.2 pps
0.8 pps
0.3 pps
-0.2 pps
0.1 pps
1.9 pps
0.3 %
0.7 pps
0.8 pps
0.9 pps
0.8 pps
-0.1 pps
-0.1 pps
0.0 pps
0.2 pps
0.3 pps
0.1 pps
0.5 pps
0.5 pps
0.4 pps
0.0 pps
0.0 pps
0.1 pps
-0.1 pps
0.5 pps
-0.1 pps
0.2 pps
0.1 pps
0.0 pps
-0.1 pps
0.2 pps
2.7 pps
0.0 %
0.0 %
0.3 %

-1.2 pps
-0.1 pps
: pps
3.3 pps

0.5 pps
0.0 pps
1.3 pps
: pps
-1.2 pps

ANNEX 2

Policy variables

Austria

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Belgium

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

26.40

47.95

42.63

47.95

43.19

26.20

48.17

42.94

48.17

43.43

 :   

48.41

43.35

48.41

43.69

1998

2003

2008

2.21

2.92

1.50

3.25

1.93

2.37

1.50

3.25

1.93

2.37

1.50

3.25

2008

2009

2010

0.55

0.55

0.51

0.51

0.55

0.55

0.51

0.51

0.55

0.55

0.51

0.51

2008

2009

2010

12

5

12

5

12

5

Last three data points

2009

2010

2011

mean

median

45.80

52.60

44.70

51.40

 :   

 :   

2009

2010

2011

27.60

55.33

50.95

55.34

49.40

28.00

55.37

51.11

55.39

49.51

 :   

55.50

51.27

55.55

49.75

1998

2003

2008

2.15

1.68

2.63

4.13

2.18

1.73

2.63

4.13

2.18

1.73

2.63

4.13

2008

2009

2010

0.57

0.58

0.52

0.52

0.67

0.63

0.53

0.53

0.66

0.63

0.53

0.53

2008

2009

2010

unlimited

unlimited

unlimited

unlimited

unlimited

unlimited

149

European Commission

Labour Market Developments in Europe, 2012

Bulgaria

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Czech Republic

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

39.10

:

36.30

:

34.00

:

2009

2010

2011

16.80

33.81

29.00

33.81

33.81

16.10

32.50

27.78

32.50

32.50

 :   

:

:

:

:

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2008

2009

2010

0.47

0.47

0.15

0.15

0.54

0.54

0.15

0.15

0.76

0.76

0.14

0.14

2008

2009

2010

12

4

12

4

12

4

Last three data points

2009

2010

2011

mean

median

34.30

:

33.30

:

32.50

:

2009

2010

2011

27.00

42.01

37.24

42.01

38.72

26.90

42.13

37.22

42.13

38.90

 :   

42.35

37.49

42.51

39.47

1998

2003

2008

1.90

3.31

0.50

2.13

1.90

3.31

0.50

2.13

1.96

3.05

0.88

2.13

2008

2009

2010

0.53

0.30

0.30

0.30

0.66

0.32

0.32

0.32

0.70

0.36

0.36

0.36

2008

2009

2010

12

6

11

5

11

5

150

Statistical annex

Policy variables

Germany

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Denmark

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

22.10

50.94

46.29

50.94

46.03

22.10

49.22

44.30

49.22

45.01

 :   

49.81

45.01

49.81

45.64

1998

2003

2008

2.34

2.68

2.00

3.75

2.09

2.68

1.50

3.75

2.12

3.00

1.25

3.75

2008

2009

2010

0.60

0.60

0.44

0.36

0.60

0.60

0.45

0.37

0.62

0.62

0.42

0.35

2008

2009

2010

18

6

18

6

18

6

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

13.10

39.53

36.36

39.53

37.98

12.90

38.30

35.03

38.30

36.69

 :   

38.40

35.18

38.40

36.80

1998

2003

2008

1.50

1.63

1.38

3.88

1.50

1.63

1.38

3.88

1.50

1.63

1.38

3.13

2008

2009

2010

0.61

0.61

0.61

0.58

0.60

0.60

0.60

0.58

0.61

0.61

0.61

0.57

2008

2009

2010

48

48

48

48

48

48

151

European Commission

Labour Market Developments in Europe, 2012

Estonia

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Greece

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

mean

median

Last three data points

2009

2010

2011

36.40

35.50

33.50

2009

:

:

39.17

35.93

39.17

37.74

2010

:

:

40.05

36.86

40.05

38.64

2011

:

:

40.14

37.05

40.14

38.78

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2.10

2.46

1.75

3.25

2008

2009

2010

0.54

0.44

0.18

0.18

0.53

0.44

0.21

0.21

0.54

0.44

0.24

0.24

2008

2009

2010

12

6

12

6

12

6

Last three data points

2009

2010

2011

mean

median

46.60

59.30

43.40

55.20

56.40

71.80

2009

2010

2011

20.60

39.32

39.40

38.17

34.41

 :   

39.32

39.36

38.24

34.41

 :   

38.83

38.66

38.04

35.61

1998

2003

2008

3.50

2.25

4.75

3.25

2.73

2.33

3.13

3.25

2.73

2.33

3.13

3.25

2008

2009

2010

0.53

0.53

0.35

0.00

0.52

0.52

0.33

0.00

0.53

0.53

0.33

0.00

2008

2009

2010

12

5

12

5

12

5

152

Statistical annex

Policy variables

Spain

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Finland

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

37.60

45.40

37.80

44.70

36.70

 :   

2009

2010

2011

26.60

38.26

36.78

38.26

34.35

26.30

39.75

38.30

39.75

36.48

 :   

39.89

38.47

39.89

36.63

1998

2003

2008

2.93

2.61

3.25

3.13

2.98

2.46

3.50

3.13

2.98

2.46

3.50

3.13

2008

2009

2010

0.61

0.61

0.61

0.23

0.60

0.60

0.60

0.23

0.60

0.60

0.60

0.24

2008

2009

2010

24

4

24

4

24

4

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

22.40

42.50

39.82

42.50

37.07

22.10

42.48

39.90

42.48

36.97

 :   

42.73

40.23

42.73

37.19

1998

2003

2008

2.09

2.31

1.88

2.63

2.02

2.17

1.88

2.63

1.96

2.17

1.75

2.38

2008

2009

2010

0.51

0.51

0.51

0.44

0.52

0.52

0.52

0.44

0.54

0.54

0.54

0.45

2008

2009

2010

23

23

23

23

23

23

153

European Commission

Labour Market Developments in Europe, 2012

France

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Hungary

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

47.00

59.40

46.50

58.80

 :   

 :   

2009

2010

2011

33.20

49.30

46.42

49.30

45.94

33.40

49.35

46.52

49.35

46.21

 :   

49.38

46.59

49.38

46.50

1998

2003

2008

2.98

2.34

3.63

2.13

3.05

2.47

3.63

2.13

3.05

2.47

3.63

2.13

2008

2009

2010

0.66

0.66

0.66

0.34

0.67

0.67

0.67

0.34

0.66

0.66

0.66

0.34

2008

2009

2010

36

7

36

4

36

4

Last three data points

2009

2010

2011

mean

median

38.30

:

38.00

:

38.60

:

2009

2010

2011

28.20

53.10

48.16

53.10

46.16

25.60

46.60

41.66

46.60

43.79

 :   

49.38

41.09

49.38

45.15

1998

2003

2008

1.27

1.92

0.63

2.88

1.52

1.92

1.13

2.88

1.65

1.92

1.38

2.88

2008

2009

2010

0.59

0.33

0.23

0.23

0.58

0.33

0.25

0.25

0.56

0.30

0.22

0.22

2008

2009

2010

9

9

9

9

9

9

154

Statistical annex

Policy variables

Ireland

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Italy

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

44.90

49.50

44.70

 :   

44.50

 :   

2009

2010

2011

14.20

24.74

19.09

24.74

16.16

13.40

25.83

20.80

25.83

16.73

 :   

26.75

22.13

26.78

21.28

1998

2003

2008

0.93

1.60

0.25

2.38

1.11

1.60

0.63

2.38

1.11

1.60

0.63

2.38

2008

2009

2010

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.50

0.49

0.49

2008

2009

2010

15

12

12

9

12

9

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

 :   

46.79

44.21

46.79

43.46

 :   

47.17

44.72

47.17

44.01

 :   

47.61

45.27

47.61

44.51

1998

2003

2008

2.70

1.77

3.63

4.88

1.82

1.77

1.88

4.88

1.89

1.77

2.00

4.88

2008

2009

2010

0.59

0.59

0.00

0.00

0.59

0.59

0.00

0.00

0.59

0.59

0.00

0.00

2008

2009

2010

12

8

12

8

12

8

155

European Commission

Labour Market Developments in Europe, 2012

Lithuania

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Luxembourg

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

42.40

 :   

43.60

59.40

42.60

 :   

2009

2010

2011

28.40

40.73

37.87

40.73

38.94

27.80

40.66

39.78

40.66

38.84

 :   

:

:

:

:

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2008

2009

2010

0.61

0.16

0.16

0.16

0.68

0.20

0.20

0.20

0.43

0.21

0.21

0.21

2008

2009

2010

9

6

9

6

9

6

Last three data points

2009

2010

2011

mean

median

47.80

59.70

48.60

60.20

49.30

61.50

2009

2010

2011

14.00

32.29

25.29

33.87

27.36

14.00

32.72

25.88

34.31

27.67

 :   

34.35

27.64

35.96

29.22

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

3.25

2.75

3.75

3.88

2008

2009

2010

0.85

0.85

0.44

0.44

0.84

0.84

0.46

0.46

0.84

0.84

0.46

0.46

2008

2009

2010

12

12

12

12

12

12

156

Statistical annex

Policy variables

Latvia

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Malta

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

41.30

:

41.90

:

44.80

:

2009

2010

2011

21.60

42.20

38.48

42.20

41.54

20.90

44.22

40.17

44.22

43.48

 :   

:

:

:

:

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2008

2009

2010

0.83

0.41

0.23

0.23

0.84

0.42

0.26

0.26

0.87

0.43

0.29

0.29

2008

2009

2010

9

4

9

9

9

9

Last three data points

2009

2010

2011

mean

median

46.50

54.80

47.20

56.00

48.30

57.40

2009

2010

2011

8.90

22.28

20.92

22.28

17.67

 :   

22.39

21.09

22.39

18.14

 :   

:

:

:

:

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2008

2009

2010

0.41

0.41

0.41

0.41

0.43

0.43

0.43

0.43

0.41

0.42

0.42

0.42

2008

2009

2010

5

5

5

5

5

5

157

European Commission

Labour Market Developments in Europe, 2012

Netherlands

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Poland

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

43.90

52.00

44.70

51.70

 :   

 :   

2009

2010

2011

 :   

38.02

34.28

38.02

33.25

 :   

38.10

34.34

38.10

33.49

 :   

37.76

34.03

37.76

33.11

1998

2003

2008

2.73

3.08

2.38

3.00

2.12

3.05

1.19

3.00

1.95

2.72

1.19

3.00

2008

2009

2010

0.74

0.70

0.70

0.54

0.74

0.70

0.70

0.53

0.74

0.70

0.70

0.53

2008

2009

2010

38

3

38

3

38

3

Last three data points

2009

2010

2011

mean

median

40.00

:

40.80

:

38.50

:

2009

2010

2011

 :   

34.12

31.35

34.12

33.13

 :   

34.19

31.51

34.19

33.23

 :   

34.31

31.80

34.31

33.41

1998

2003

2008

1.40

2.06

0.75

4.13

1.65

2.06

1.25

4.13

1.90

2.06

1.75

3.63

2008

2009

2010

0.46

0.46

0.24

0.24

0.45

0.45

0.23

0.23

0.50

0.44

0.21

0.21

2008

2009

2010

18

6

18

6

12

6

158

Statistical annex

Policy variables

Portugal

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Romania

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

42.80

57.80

42.40

59.80

42.20

 :   

2009

2010

2011

19.10

37.47

35.23

37.47

32.67

19.10

37.62

35.58

37.62

32.66

 :   

39.54

38.62

39.00

33.14

1998

2003

2008

3.67

4.33

3.00

2.88

3.67

4.33

3.00

2.88

3.15

4.17

2.13

1.88

2008

2009

2010

0.84

0.84

0.84

0.17

0.84

0.84

0.84

0.17

0.75

0.75

0.75

0.17

2008

2009

2010

38

9

38

9

38

9

Last three data points

2009

2010

2011

mean

median

34.90

:

32.40

:

 :   

:

2009

2010

2011

24.10

44.40

42.21

44.40

43.11

23.20

44.32

42.32

44.32

43.12

 :   

:

:

:

:

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2008

2009

2010

0.42

0.42

0.08

0.08

0.48

0.48

0.10

0.10

0.44

0.44

0.09

0.09

2008

2009

2010

12

6

15

9

12

6

159

European Commission

Labour Market Developments in Europe, 2012

Sweden

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Slovenia

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

 :   

 :   

 :   

 :   

 :   

 :   

2009

2010

2011

32.90

43.23

40.46

43.23

41.29

32.90

42.76

39.97

42.76

40.65

 :   

42.80

40.06

42.80

40.69

1998

2003

2008

2.24

2.86

1.63

3.75

2.24

2.86

1.63

3.75

1.87

2.86

0.88

3.75

2008

2009

2010

0.50

0.50

0.50

0.44

0.48

0.48

0.48

0.43

0.47

0.47

0.47

0.43

2008

2009

2010

21

14

21

14

21

14

Last three data points

2009

2010

2011

mean

median

44.20

:

50.50

:

52.70

:

2009

2010

2011

14.40

42.24

37.46

42.24

39.72

14.30

42.54

37.80

42.54

38.57

 :   

42.50

37.77

42.50

38.54

1998

2003

2008

 :   

 :   

 :   

 :   

 :   

 :   

 :   

 :   

2.51

3.15

1.88

2.88

2008

2009

2010

0.64

0.64

0.33

0.33

0.65

0.65

0.33

0.33

0.73

0.68

0.32

0.32

2008

2009

2010

24

3

24

3

24

3

160

Statistical annex

Policy variables

Slovak Republic

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

United Kingdom

Monthly minimum wage (proportion of average monthly earnings, to %); Eurostat

List of policy variables

Social security and other labour costs paid by employer

Total tax wedge (incl.employers SSC) - Married couple, no children, 100% and 100% of AW

Total tax wedge (incl.employers SSC) - Married couple, 2 children, 100% and 100% of AW

Tax wedge, average wage person, no children; EC/OECD

Tax wedge, low wage person, no children; EC/OECD

Employment Protection Legislation overall; OECD

Employment Protection Legislation for regular employment; OECD

Employment Protection Legislation for temporary employment; OECD

Employment Protection Legislation for collective dismissals; OECD

NRR; average wage person; no children; 2nd month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 7th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 13th month of unemployment; incl. social assistance; EC/OECD

NRR; average wage person; no children; 60th month of unemployment; incl. social assistance; EC/OECD

Unemployment benefit duration_maximum; EC/OECD

Unemployment benefit duration_minimum; EC/OECD

Last three data points

2009

2010

2011

mean

median

35.70

46.80

36.00

47.50

36.10

47.70

2009

2010

2011

25.70

37.71

33.41

37.71

34.36

25.50

37.92

33.63

37.92

34.67

 :   

38.87

34.71

38.87

36.09

1998

2003

2008

1.80

2.47

1.13

4.00

1.34

2.31

0.38

3.75

1.44

2.50

0.38

3.75

2008

2009

2010

0.71

0.21

0.21

0.21

0.64

0.20

0.20

0.20

0.64

0.20

0.20

0.20

2008

2009

2010

6

4

6

4

6

4

Last three data points

2009

2010

2011

mean

median

38.60

49.60

38.70

50.10

38.80

50.50

2009

2010

2011

15.70

32.41

30.06

32.41

29.10

15.70

32.58

30.27

32.58

29.37

 :   

32.50

30.19

32.50

28.48

1998

2003

2008

0.60

0.95

0.25

2.88

0.75

1.12

0.38

2.88

0.75

1.12

0.38

2.88

2008

2009

2010

0.38

0.38

0.38

0.38

0.38

0.38

0.38

0.38

0.37

0.37

0.37

0.37

2008

2009

2010

6

6

6

6

6

6

161

 
EUROPEAN ECONOMY SERIES

Previous titles in the European Economy series can be accessed and downloaded

free of charge from the following address:

ec.europa.eu/economy_finance/publications/

2011

1-2011	 •	 European	Economic	Forecast	–	Spring	2011

2-2011	 •	 Labour	market	developments	–	2011

3-2011	 •	 Public	finances	in	EMU	–	2011

4-2011	 •	

The	2012	Ageing	Report:	Underlying	Assumptions	and	Projection	

						Methodologies	

5-2011	 •	

Tax	reforms	in	EU	Member	States	–	2011	–	Tax	policy	challenges	for

economic	growth	and		fiscal	sustainability	

6-2011	 •	 European	Economic	Forecast	–	Autumn	2011

2012

1-2012	 •	 European	Economic	Forecast	–	Spring	2012

2-2012	 •	

The	2012	Ageing	Report:	Economic	and	budgetary	projections	for	the		
27	EU	Member	States	(2010-2060)

3-2012  •	 Convergence	Report	2012

4-2012  •	 Public	finances	in	EMU	–	2012

5-2012	 •	 Labour	market	developments	in	Europe	–	2012

 
 
 
 
  
 
 
 
 
 
 
 
	
		
	
	
European Commission 

European Economy – 5/2012 – Labour market in Europe, 2012 

Luxembourg: Publications Office of the European Union 

2012 — 161 pp. — 21 x 29.7 cm 

ISBN 978-92-79-22853-7 
doi: 10.2765/18924 

Price (excluding VAT) in Luxembourg: 15 EUR