Employment and Social Developments in Europe (ESDE) 2024

3. Labour market developments

3.2. Unemployment rates

In 2023, unemployment levels remained at record lows. The unemployment rate among people aged 15-74 declined modestly in both the EU (by 0.1 pp, to 6.1%) and euro area (by 0.2 pp, to 6.6%), reaching the lowest rates ever recorded by Eurostat. Compared to 2022, the reduction was 0.1 pp for both men (to 5.8%) and women (to 6.4%) (Chart 1.7). Among the signs of ongoing labour hoarding (as companies retain their employees despite an expected decrease in output in the short term) the unemployment rate is expected to remain broadly stable in 2024, at 6.1%, before falling slightly in 2025, to 6.0%. ⁽²³⁾ In 2023, the unemployment rate remained far higher for people with education levels up to lower secondary (11.9%, -0.4 pp from 2022) than for those with upper secondary and post-secondary (non-tertiary) education (5.6%, -0.1 pp from 2022) or with tertiary education (3.8%, stable from 2022).

In 13 Member States, the unemployment rate declined compared to 2022. In most cases, the decrease was less than 1.0 pp, with the exception of Greece (-1.4 pp, to 11.1%). It remained stable in Romania (5.6%) and France (7.3%), and increased by between 0.1 pp and 0.9 pp in the remaining 11 Member States. ⁽²⁴⁾

The long-term unemployment rate fell in 2023. After a brief increase during the onset of the COVID-19 pandemic, the long-term unemployment rate continued to decline steadily, reaching 2.1% in 2023 (-0.3 pp compared to 2022), with long-term unemployment representing 35.0% of all unemployment (3.5 pp lower than in 2022). Very long-term unemployment dropped to 1.2% (0.2 pp lower than 2022), representing just over one-fifth (20.6%) of total unemployment.

The youth unemployment rate remained stable in the EU and decreased slightly in the euro area in 2023. It averaged 14.5% in the EU and 14.5% in the euro area (-0.1 pp). The most substantial annual declines were recorded in Greece (-4.7 pp, to 26.7%) and Latvia (-3.0 pp, to 12.3%), with the sharpest rises recorded in Hungary (+2.2 pp, to 12.8%) and Finland (+2.0 pp, to 16.2%). The unemployment rate was 2.8 times higher among young workers (aged 15-24) than the rest of population (aged 25-74). The unemployment rate of young people is more sensitive to the economic cycle than other age groups, leading to quicker falls in levels during economic recovery, but higher increases when the economy slows down. These young people have a higher probability of obtaining temporary contracts or being dismissed during recession due to shorter tenures, limited work experience, and lower firing costs. ⁽²⁵⁾

The share of people aged 15-29 who were not in employment, education or training (NEET) in the EU fell again in 2023. The overall NEET rate decreased by 0.5 pp (to 11.2%), compared to a decline of 1.4 pp in 2022. The NEET rate remained somewhat higher for women (12.5%) than men (10.1%), increasing most in Lithuania (+2.8 pp) and Luxembourg (+1.7 pp), and falling most markedly in Italy (-2.9 pp), Poland (-1.6 pp) and Croatia (-1.5 pp) (Chart 1.8). Romania is now the Member State with the highest NEET rate (19.3%), while the Netherlands has the lowest rate (4.7%). Despite the recent decline, the NEET rate remains elevated, negatively affecting young people. Complementing the EU employment target for 2030, the action plan for the implementation of the European Pillar of Social Rights sets the goal to decrease the NEET rate to 9% by 2030, meaning that this progress must be maintained in the coming years. The rate of early leavers from education and training continued its long-term downward trend in 2023, dropping by 0.2 pp, to 9.5% (7.7% for women and 11.3% for men).