Employment in Europe in 2021 – Lockdown transforms labour markets

The COVID-19 pandemic continued to be a defining force in the lives and work of Europeans for a second year in 2021, and Eurofound continued its work of examining and recording the many and diverse impacts across the EU Member States. Living and working in Europe 2021 provides a snapshot of the changes to employment, work and living conditions in Europe, as gathered by Eurofound’s research activities in 2021. This yearbook also summarises the Agency’s findings on other challenging aspects of social and economic life – including gender equality in employment, wealth inequality and labour shortages – that will have a significant bearing on recovery from the pandemic, resilience in the face of the war in Ukraine, and a successful transition to a green and digital future. Eurofound’s research on working and living conditions in Europe provides a bedrock of evidence for input into social policymaking and achieving the Agency’s vision ‘to be Europe’s leading knowledge source for better life and work’.

Lockdown transforms labour markets

Hopes of a return to normal conditions in European labour markets, leaving the upheaval of 2020 behind, were dashed in 2021. As the year opened, countries across Europe grappled with a third pandemic wave, and once again, governments clamped down on commercial and social life with varying degrees of severity. While the hard lockdowns of spring 2020 were not reinstated, there were, nonetheless, knock-on effects on employment. These were captured by the third round of Eurofound’s Living, working and COVID-19 e-survey, in February–March 2021. At that point in time, 1 in 10 respondents who had been employed before the pandemic reported that they were jobless, an increase of 2 percentage points since the summer of 2020 (8%) and double the figure of spring 2020 (5%).

Employment growth back on tracktrack

Nevertheless, the feared collapse in employment did not materialise: government policy across the EU to minimise job loss arising from business closures, by means of short-time working and temporary layoff schemes, had paid off. In fact, job loss bottomed out in the second quarter of 2020, just after the first wave of the pandemic, when the employment rate fell to 71.6% (among 20–64-year-olds) from a high of 73.3% in the last quarter of 2019. The difference of just 1.7 percentage points may be small, but it translates to around 5 million fewer jobs compared to the same quarter of
the previous year (Figure 1). With the subsequent easing of lockdowns, employment recovered partially, such that the year-on-year reduction in employment was 2.8 million jobs by the end of 2020.

Employment continued to recover in 2021, reaching 73.9% by the third quarter, higher than before the crisis and the highest ever recorded EU employment rate. While employment growth is back on track, the challenge of achieving the employment target endorsed by EU leaders at the Porto Social Summit in May 2021 – at least 78% of 20–64-year-olds in employment by 2030 – is formidable, and more difficult than if there had been no pandemic.

Unemployment near static

While the unemployment rate has typically been the yardstick for measuring damage to labour markets in times of crisis, that indicator has proved to be less revealing this time round because of state intervention to support employment. The year-on-year unemployment rate remained almost unchanged during Q2 2020, increasing to 6.7% from
Q4 2019. It subsequently rose further to peak at 7.4%, remaining steady at that rate up to May 2021, when it began to fall. The latest data available at the time of writing indicates that EU unemployment was 6.2% in January 2022, the lowest rate on record.

Chosen excerpts by Job Market Monitor. Read the whole story @  Living and working in Europe 2021 | Eurofound