Employment and Social Developments in Europe (ESDE) 2024

5. Conclusions

In 2023, EU growth was weak in the context of decreasing, but elevated, inflation levels. Inflation declined throughout the year, initially driven primarily by the decrease in energy prices. Real GDP increased by 0.4% in 2023 and is expected to expand by 1.0% in 2024 and by 1.6% in 2025. However, uncertainties and significant risks persist, especially as geopolitical tensions continue.

In recent years, the labour market remained resilient, with employment at record highs and unemployment at record lows. The employment rate reached its highest-ever level in 2023, at 75.3%, while unemployment remained at 6.1%. The labour market situations of population groups in vulnerable situations showed improvement, albeit with significant differences to the general population. Employment growth is expected to be limited in 2024 and 2025.

In the context of economic and demographic challenges, significant labour shortages persist. Labour shortages continue to be high, albeit declining slowly, with a decreasing labour demand. Limited employment growth is anticipated in the coming years, partially due to moderate economic growth. The situation has improved for young people, those classified as NEET, and people in vulnerable situations (e.g. non-EU citizens, people with disabilities), but still lags considerably compared to the total population. Labour shortages can be addressed comprehensively through activating underrepresented people in the labour market, supporting skills development, improving working conditions in certain sectors, improving fair intra-EU mobility for workers and learners, and attracting talent from outside the EU. ⁽⁵⁰⁾ Social dialogue and the social partners are crucial in promoting such actions.

Participation in education and training activities saw only a modest increase, indicating a positive, but insufficient, trend towards enhancing skills and competencies. Barriers such as perceived lack of necessity, schedule conflicts, and financial constraints hindered broader participation in training. These must be addressed, as investing in skills remains critical for addressing labour shortages, maintaining competitiveness in the EU, and supporting the green and digital transitions. The European Commission promotes skills development and provides support for skills, training and education through initiatives like the new European Skills Agenda, the Pact for Skills, and the action plan for the implementation of the European Pillar of Social Rights, as well as supporting social partners in their capacity-building and social dialogue activities.

The surge in public expenditure on social, health, and economic priorities during the COVID-19 pandemic underlines the role of government intervention in mitigating the adverse impacts of crises. Social protection measures, including income support schemes and unemployment benefits, played a vital and countercyclical role in cushioning the economic fallout of the pandemic. In recent years, tax-benefit systems demonstrated their role in reducing inequality and augmenting the market income of vulnerable households. Sustained efforts are needed to ensure the effectiveness and efficiency of public spending and policies in supporting people in the most vulnerable situations.

The risk of poverty or social exclusion decreased slightly and income inequality remained stable, while severe material and social deprivation and energy poverty increased, particularly for low-income households. The at-risk of poverty (AROP) rate decreased somewhat, while income inequality remained stable (2022 incomes), with Eurostat’s flash estimate predicting overall stability of income inequality and a further slight decrease in the AROP rate (2023 incomes). Tax-benefit systems played a crucial role in mitigating poverty and inequality.