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Europe – Employment down and labour costs up in the fourth quarter

16 March 2012

As anticipated, employment in the Eurozone dropped -0.2% when compared to the previous quarter, while in the wider EU the employment rate fell by -0.1%. At the same time Eurostat revealed that labour costs have gone up in the quarter, having been on the increase since 2001 in both the Eurozone and the EU.

The employment level was brought down to 146.4 million people in the Eurozone, a reduction of -0.2% when compared to a year ago. However, when looking at numbers for the entire year, employment was up +0.2% in the Eurozone after a -0.5% drop in 2010. Overall in the EU, 223 million are estimated to have been in employment in the quarter.

Germany, Austria, Finland and Norway have all seen an increase of employment of +0.3% on the quarter, while the sharpest drop was in Portugal with a decrease of -2.7%. Spain and Estonia also saw a -1% fall in employment levels, followed by Poland and Lithuania.

Amongst the larger European economies, employment in France remained flat in the quarter while in the UK there has been an increase of +0.2%. However, in the Netherlands, the number of employed people dropped by -0.1%.

Generally the trend follows a North-South divide with countries in Northern and Western Europe faring better than those in the South. 

Looking at sectors, the sharpest drop was noted in construction, where the workforce went down -1.5% in the Eurozone and -0.8% in the EU. But activities in real estate improved by over +2%, reversing the drop of the two previous quarters.

Payroll levels in professional and support services also went up on the quarter, rising +0.4% after slipping -0.2% in Q3. Unsurprisingly, financial and insurance staff fell -0.1% after the industry saw a slight recovery in the prior quarter.  

A survey by the European Commission also suggests that employment could remain weak and possibly fall further, as hiring activities in all major sectors have remained below average.

"With the EU economy set to stagnate and a mild recession unfolding in the euro area at the current juncture, the labour market situation is likely to worsen over the forecast horizon," the Commission said last month.

At the same time as European employment went down, labour costs have gone up by 2.7% in Q4. In the EU, labour costs per hour increased by +3.2% in industry, +2.7% in construction and +2.5% in services.

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