Employment and Social Developments in Europe (ESDE) 2023

3. Labour Market Developments

3.2. Unemployment rates

Continuing the momentum gained in the second half of 2021, unemployment remained at record low levels even when economic activity growth slowed in the second half of 2022. The unemployment rate (people aged 15-74) declined in both the EU and the euro area by 0.9 pp, to 6.2% and 6.8% respectively, in both cases the lowest rates ever recorded by Eurostat. The reduction was the same for men (-0.9 pp, to 5.9%) and for women (-0.9 pp, to 6.5%). The unemployment rate is expected to remain stable in 2023, at 6.2%, as a consequence of the continued labour market tightness due to skill shortages (Chart 1.8). ⁽⁴¹⁾ In 2022, the unemployment rate declined faster but remained far higher for people with education up to lower secondary (12.2%, -1.6 pp from 2021) compared to those with upper secondary and post-secondary (non-tertiary) education (5.7%, -0.7 pp from 2021) or with tertiary education (3.7%, -0.8 pp from 2021).

Compared to 2021, the unemployment rate declined in almost all Member States. Romania was the exception, remaining stable, while the remainder experienced drops of at least 0.5 pp. Those falls were particularly prominent in Greece (-2.2 pp, to 12.5%), Spain (-1.9 pp, to 12.9%), and Ireland (-1.7 pp, to 4.5%) (Chart 1.9).

The youth unemployment rate declined in 2022. It averaged 14.5% in the EU (-2.2 pp) and 14.6% in the euro area (-2.3 pp). The most substantial annual declines were recorded in Italy (-6.0 pp, to 23.7%), Bulgaria (-5.1 pp to 10.7%) and Spain (-5.0 pp, to 29.8%), with the sharpest rises recorded in Estonia (+1.9 pp, to 18.6%) and Romania (+1.8 pp, to 22.8%). The unemployment rate was 2.7 times higher among young workers (aged 15-24) than the rest of population (aged 25-74), a slightly higher proportion than in 2019 before the COVID-19 pandemic (when it was 2.6).

The share of people aged 15-29 who were neither in employment nor in education and training (NEET) fell again in 2022. In the EU, that rate decreased by 1.4 pp (to 11.7%), compared to a decline of 0.8 pp in 2021. The NEET rate remained somewhat higher for women (13.0%) than for men (10.5%), increasing most in Slovenia (+1.2 pp) and Czechia (+0.5 pp), and falling most markedly in Italy (-4.1 pp), Bulgaria and Poland (-2.5 pp each). Romania is now the Member State with the highest NEET rate (19.8%), while the Netherlands has the lowest rate (4.2%). Despite the recent decline, the NEET rate is still elevated and needs to be reduced in order to avoid scarring effects among young people. The NEET rate for Roma people aged 16-24 in 2021 reached 71% in Spain and 59% in Romania, according to a survey of the European Union Fundamental Rights Agency ⁽⁴²⁾ compared to official NEET rates (people aged 15-24) of 11.0% and 18.0%, respectively. Complementing the EU employment target for 2030, the European Pillar of Social Rights action plan sets as a goal to decrease the NEET rate to 9% by 2030, meaning that this progress has to be maintained in the coming years. The rate of early leavers ⁽⁴³⁾ declined slightly in 2022, dropping by 0.2 pp to 9.6% (11.1% for men and 8.0% for women).

The long-term unemployment rate ⁽⁴⁴⁾ fell in 2022. Having increased briefly during the onset of the COVID-19 pandemic, the long-term unemployment rate began to decline steadily from the second half of 2021, during the economic recovery, and that decline continued in 2022, when it fell to 2.4% in the EU (-0.4 pp) and 2.7% in the euro area (-0.5 pp). Long-term unemployment represented 38.5% of all unemployment, 0.7 pp lower than in 2021. Very long-term unemployment ⁽⁴⁵⁾ dropped by 0.1 pp, at 1.4% in 2022, representing just under one-quarter (23.2%) of total unemployment.