Employment and social situation: Quarterly review data confirms previous positive developments

The latest quarterly data confirms previous positive developments. The EU economy continues its moderate recovery, which is broadening across Member States.

Labour markets in the EU continue to gradually recover, benefitting from the strengthening in economic activity. Nevertheless, in the first quarter of 2015 GDP in the euro area was 1.5% lower than in the first quarter of 2008 and EU and euro area employment levels and rates are below those of 2008.

Unemployment continues to decline

Employment continues to improve in the EU, euro area and most Member States, and is higher than a year ago in the quasi totality of Member States. Most sectors are contributing to the observed improvement and, if services have driven the initial employment recovery, industry is now also contributing to employment creation. The increase in employment and participation has also widened to all sub-population groups, men and women, low to high skills, young and old, with the high-skilled and the older age groups registering the largest increases. The number of permanent and full-time jobs is once again increased more than temporary and part-time jobs.

Unemployment, still high, continues to decline in the EU, euro area and in most Member States, including those which were hit hard by the crisis and reached very high levels of unemployment. Long-term unemployment continues to recede gradually, affecting about 5% of the labour force. We also see positive developments in households' financial situation. Gradual improvements in the labour market and economic situation has contributed to a sustained and faster increase of household income through higher income from work and higher social transfers.

Long-term unemployment in the EU shows a reinforcement of the downward trend started last quarter. The long-term unemployment rate decreased by 0.3 pp in the year to the fourth quarter of 2014 and is now 5.0%. This is the second consecutive quarter with a year-on-year decrease and in this quarter, the pace is slightly faster by 0.1 pp. Nevertheless, long-term unemployment remains a major challenge in the EU and improvements are not yet inclusive as people with longer periods of unemployment face more difficulties to find a job.

Youth becoming more engaged

Young people in the EU are increasingly engaging in either employment or education and training. Employment for those aged 15-24 is increasing, for a second consecutive quarter, making a positive contribution to employment levels. By the fourth quarter of 2014, 32.8% of young people (aged 15-24) in the EU had a job, up from 32.1% in the fourth quarter of 2013. Youth unemployment has also declined, in the year to May 2015, the youth unemployment rate fell by 1.6 pp from 22.2% to 20.6% in the EU and by 1.7 pp from 23.8% to 22.1% in the euro area. This is accompanied by higher enrolment in education and training and a reduction in NEETs rates.

Persistent differences remain across the EU

Even though employment grew in most Member States, there is a large difference between the highest employment rate of 79.7% in Sweden and the lowest rate of 53.4 % in Greece. While unemployment decreased in most Member States, including those hit hard by the crisis, unemployment rates vary from about 5% in Germany, Austria and the UK to more than 20% in Spain and Greece.