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Europe — Labour markets relatively resilient in the crisis

24 November 2009

According to the '2009 Employment in Europe Report' by the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission, the current crisis is taking its toll on EU labour markets, reversing most of the employment growth achieved since 2000.

Men, young people, the low-skilled and workers on temporary contracts have borne the brunt of the employment contraction. Employment in the EU has shrunk by over 4 million jobs since the start of the crisis, although the effect has been somewhat mitigated thanks to the use of shorter working hours and other schemes. But these short term measures, however important, are not in themselves sufficient to ensure a successful exit from the crisis.

Employment policies must focus on preparing for the transition to a low-carbon economy.

Vladimir Spidla, Commissioner for Employment, Social Affairs and Equal Opportunities said "this report shows how important it is to reconcile our short-term response to the crisis with our longer-term structural reforms. These reforms are essential for the EU economy and labour markets to emerge from the current downturn well prepared for future challenges, in particular the transition to a low-carbon economy."

With this challenge in mind, the 21st annual edition of the Employment in Europe report takes a deeper look at two key issues for future EU labour market policy: movements to, from and between jobs and the implications of climate change for the job market.

European labour markets have shown considerable dynamism in recent years, as every year, around 22% of European workers change jobs. Such dynamism is not just limited to countries usually seen as 'flexible', such as the UK or Denmark, but concerns all EU countries, although the figures range from 14% of workers in Greece and 16% in Sweden to over 25% in the UK, Finland, Spain and Denmark. This appears to be part of a more sustained rise, since the late 1990s, in transitions from inactivity and unemployment towards employment in the EU, suggesting a fundamental structural improvement in our labour markets.

However, not all workers have benefited equally from this positive trend. Although the number of long-term unemployed has declined since the 1990s, this problem remains a serious challenge. In recent years, close to 45% of all unemployment spells lasted longer than a year in the EU, compared with only about 10% in the US. Tackling this issue has become even more urgent since the start of the crisis. Policies aimed at supporting workers' transitions toward employment in line with the principles of 'flexicurity' are key to lowering long-term unemployment and preserving employability.

The EU's moves towards a competitive low-carbon economy will become important driving forces from a labour market perspective. Although the total net job creation effects may not be very large — as creation of new 'green' jobs and greening of existing jobs will partly be offset by loss of some existing jobs — the underlying structural changes will involve re-allocation of workers across economic sectors and skill types.

Climate change and related policy measures will therefore have an important impact on the future demand for skills. The new competencies required by the low-carbon economy will, at least initially, favour high-skilled workers. However, with market deployment of new technologies, lower-skilled workers should also be able to fill the new jobs — provided they receive adequate training. Hence, policy focus on skills - to ease transitions towards new jobs and to limit emergence of skills gaps and shortages — together with adequate social dialogue are the main ingredients needed to facilitate the shift to low-carbon economy.

To read the full report please click here



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