5. Conclusions
Overall, the EU economy and labour market remained resilient in 2022, with labour shortages constituting a key challenge. In a difficult geopolitical and economic climate, the EU economy expanded, while record levels of high employment and low unemployment resulted in continued tightness of the labour market, with persistent and high labour shortages. Chapters 2 and 3 will look more closely at the sectors and occupations facing labour shortages, focusing on their drivers and the policies that could be used to alleviate them.
Despite facing serious challenges, the EU economy expanded in 2022. The Russian war of aggression against Ukraine inflicted immense human suffering. It also exacerbated existing rises in inflation following the COVID-19 pandemic, with a spike in energy prices, particularly for gas and electricity, driving record levels of inflation. The EU economy grew overall, although progress slowed in the second half of the year. Stabilising energy prices meant that recession was avoided and the economic outlook improved for 2023 and 2024. Nevertheless, significant risks persist, as core inflation remains stubbornly high, geopolitical tensions have not subsided, and the global economy is only slowly returning to sustained growth.
The EU labour market performed strongly, with labour shortages remaining high. In 2022, the number of people employed reached new record levels and the unemployment rate was the lowest ever recorded. As job vacancy rates spiked, high and persistent labour shortages remain a major issue, given their potential to hinder future employment growth, especially in sectors linked to the green and digital transitions. Differences in the employment situations of people with lower educational attainment, persons with disabilities and other vulnerable groups such as Roma also represent a challenge in fully integrating all workers into the labour market.
After decades of low inflation, inflationary pressures present new social challenges by eroding households’ real incomes. Record inflation leading to losses in real incomes placed increased financial pressure on households in 2022, particularly those on lower incomes. In the context of increases in inflation surpassing nominal wage growth and negatively impacting households’ purchasing power, real GDHI growth per capita was negative in the second half of 2022 and the share of households experiencing severe material and social deprivation increased.
In light of stark rises in consumer prices, financial distress has increased, particularly among lower-income households. Prices surges were considerable in 2022, including for gas, electricity, food, and transport, putting substantial pressure on the finances of lower-income households, for whom these necessity items make up a larger share of their consumption expenditure. Given the negative impacts of inflation on the purchasing power of households, overall financial distress increased, with reported financial distress at 27% among lower-income households, compared to 7.4% for higher-income households. Additionally, a decrease in the household saving rate in 2022 as a whole (while picking up in Q4), reflecting an expansion of demand for consumption following the COVID-19 recovery, could also indicate the increasing need for lower-income and middle-income households to offset financial pressure by relying on savings. The spike in energy prices in 2022, paired with overall declines in purchasing power, resulted in increased energy poverty, with all Member States (supported by the EU) implementing emergency measures to ease related financial pressures for vulnerable households and businesses.
In this challenging context, the share of people at risk of poverty or social exclusion (AROPE rate) remains relatively stable. While the AROPE rate at 21.6% in 2022 remained at a similar level to the two previous years, when broken down into its components, the AROP rate (2021 incomes) and share of persons in quasi-jobless households (reference year 2021) decreased slightly, with the SMSD rate (reference year 2022) increasing. Eurostat flash estimates show that the at-risk-of poverty (AROP) rate and income inequality in the EU remained broadly constant for 2022 incomes.
Despite the good performance of the EU economy and labour market in 2022, significant social risks persist and need to be closely monitored. High inflation in 2022 placed substantial financial pressure on households, especially those on lower incomes, posing risks to livelihoods and well-being. Ongoing economic and geopolitical uncertainty necessitates close monitoring of employment and social developments, including the evolution of real household incomes, while the risks of wage-price spirals should be monitored. (96) In the longer term, the reversal of population growth and steady increases in the old-age dependency ratio, together with their negative consequences for the economy, will bring additional challenges for the EU.
Education and skills development remain crucial in promoting employment and addressing poverty and social exclusion, both within and outside work. In general, people with lower levels of educational attainment are less likely to be in employment or to take part in adult learning. In the context of the 2023 European Year of Skills, this highlights the importance of training, in particular adult learning, in reducing these risks. In general, the AROPE rate and the AROP rate of in-work poverty vary by education level, with those with lower levels of education consistently bearing the highest risk. (97) The following chapters also explore the role of skills in gaining access to high-quality jobs and the impact of training programmes on different population sub-groups.