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European Commission

Press release

Brussels, 27 June 2012

Employment: Quarterly Review shows EU labour market and social situation continues to deteriorate

Brussels, 27 June 2012 – The employment and social situation in the EU remains subdued despite small improvements according to the Quarterly Review published today. Differences between Member States remain significant, with around half the Member States experiencing some economic growth and the other half either in stagnation or seeing a decline in the first quarter of 2012.

The Review confirms that overall employment is stagnant and is slightly decreasing in the euro area. Unemployment has been rising in the majority of Member States bringing it to above 10% since early 2012. The report takes a closer look at: labour market segmentation, participation of women and young people, migration flows within the European Union, the impact of the crisis on different sectors, developments in social protection expenditure, levels of financial distress and living conditions.

"This latest data show that the employment situation and living conditions are deteriorating significantly in a number of Member States. This underlines the urgent need for a robust solution to the current economic and financial crisis, and more specifically for each Member State to implement the Country-Specific Recommendations and the measures outlined in the Employment Package", commented European Commissioner for Employment, Social Affairs and Inclusion László Andor "We have to support job-rich growth and prevent permanent exclusion of jobless people from the labour market".

Labour market segmentation

The Quarterly Review indicates that although Member States have continued to implement active labour market policies and measures to reduce the gap between temporary and permanent contracts, wide disparities in employment terms and conditions still remain a challenge within many countries. The draft 2012 Country–Specific Recommendations address labour market segmentation by urging some Member States to make it easier to recruit young people, older people and women by adjusting their legislation on employment protection. The Employment Package also promotes measures to ensure appropriate contractual arrangements to combat labour market segmentation and to help transitions.

Participation of women and young people in the labour market

One bright spot is that inactivity rates have been falling recently, driven by significantly increased participation of women in the labour force. On the other hand, youth inactivity has increased. Some of this is explained by young people staying longer in education but the number of NEETs (those not in employment, education or training) continued to rise in 2011, accounting for 12.9 % of the population aged 15-24 (up 2.0 percentage points on 2008). The draft 2012 Country–Specific Recommendations proposed that Member States focus on ways to increase labour market participation of underrepresented groups (such as older workers, women, youngsters, the low-skilled and immigrants). In particular, the Recommendations advocate supporting employability through effective and individualised active labour market policies, improving transitions from school-to-work by combatting early school leaving and promoting apprenticeships, providing available and affordable care services, shifting taxation away from labour and keeping labour costs in line with productivity developments. The Commission will also present a proposal for a Council Recommendation on Youth Guarantees by the end of 2012 and support activation measures targeting young people in the context of Youth Guarantee schemes.

Migration flows

Due to the high unemployment rates in Southern European countries, many people, especially young people, are intending to move to another country. Recent figures confirm that labour mobility from those countries has increased, in particular to Germany. In February 2012, the number of Southern European citizens working in Germany had risen by 22 000 compared to a year before. However these flows are limited compared to the overall numbers of unemployed in Southern European countries (8.7 million in 2011). Flows from Eastern Europe remain much more substantial and increased too. Emigration of EU nationals to non-EU countries remains limited, though for some countries there are signs of new patterns (e.g. the number of employment-related visas granted by Australia to Irish citizens has increased three fold compared to the last decade).

Impact of the crisis on different sectors

Large differences are apparent between industry sectors, with the construction sector losing the most workers (employment down 15% since 2008). The public sector experienced a sudden loss of workers as fiscal constraints kicked in.

However jobs in health and social services remain a key driver for providing employment, and will continue to do so in the context of an ageing population and rising demand for healthcare. The Employment Package underlined the need for further investment and development in the health sector (as well as jobs linked to cutting carbon emissions, protecting the environment and information and communications technologies).

Social protection expenditure

In response to the economic shock, social protection expenditure increased in most Member States in the early part of the crisis. However, since 2009 it has decreased in nearly all Member States especially because of cuts in in-kind benefits. Spending on health and social services has been particularly affected, which is likely to have a detrimental impact on the population in the long-term. Overall in many Member Stes gross disposable income has fallen between 2007 and 2012, with the southern Member States and Hungary experiencing the most significant declines relative to the contraction in their GDP. In line with the Country-Specific Recommendations, Member States will need to improve the targeting, the coverage and the efficiency of their social services in order to be able to effectively tackle poverty.

Financial distress and living conditions

There has been a sharp rise over early 2012 in the share of households having to draw on their savings or to go into debt to keep up current expenses. This increase in financial distress especially affects people living on low and middle income, for whom the situation is deteriorating. Especially notable are the increases in poorer households in Italy and Spain, where the rates of financial distress have risen from 16 % to 26 % and from 23 % to 33 % respectively over the year to April.

Living conditions are deteriorating significantly in a number of Member States. Between 2008 and 2010, the share of people unable to pay their utility bills increased on average by 1 percentage point to 9% on average in the EU and by more than 3 percentage points in 10 countries. Several countries experienced marked increases in the number of people unable to afford a meal with meat (or equivalent proteins) every second day. Women tend to face higher deprivation rates than men, according to the quarterly survey. Homelessness has also grown across the EU as many people have experienced unemployment or substantial falls in income. Young people and foreign nationals have been disproportionately affected.

For more information

Employment and Social Situation Quarterly Review:

Country Specific Recommendations – see IP/12/513, MEMO/12/386 and SPEECH/12/401

Employment Package – see IP/12/380, MEMO/12/256 and MEMO/12/252

László Andor's website:

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Contacts :

Jonathan Todd (+32 2 299 41 07)

Nadège Defrère (+32 2 296 45 44)

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