While the total number of full-time workers fell throughout the 2010s, the number of part-time workers and those in temporary employment experience a consistent increase. This is related to the long-term changes to the European labor market, as employees now spend on average less than ten years with their employer – whereas in the past it was not uncommon for workers to spend their entire careers with a single firm, in countries such as the Nordics, Switzerland, and the Netherlands, the average tenure is as low as six years. In some aspects this reflects the dynamism of the European economy, with employees switching between jobs to increase their salaries and future prospects, as average net earnings have increased sharply in Europe over the past decade. At the same time, however, there are also up to a quarter of employees, depending on the country, in precarious and low wage employment, showing how Europe’s labor markets have become dualized between high-wage and low-wage work.
The European Labor Market in 2023The labor market in Europe in 2023 is the tightest it has been since the financial crisis of 2008, with unemployment in the EU down to less than six percent and the job vacancy rate rising to almost three percent. The post-pandemic surge in demand for services has meant that there are some sectors, such as hospitality and leisure, where there are more posts available than employees to fill them. Consequently, European workers have seen rising nominal wages, while real wages (that is, wages adjusted for devaluation through inflation) have remained more flat or have even fallen due to the high inflation rates across the continent, also a consequence of the post-COVID reopening.
While these quantitative changes show how the labor market has become tighter in the early-2020s, the largest change in the past few years has undoubtedly been of a more qualitative nature – the emergence of remote work. The sudden need for employees to work from home during the pandemic has become a fixture of work life in many European countries, with only slight declines since the end of pandemic-related restrictions. On average, around 11 percent of workers in the EU now usually work from home, with vast differences between countries such as Ireland and Finland, where a quarter of workers usually work remotely, and Bulgaria and Romania, where this it is less than two percent of employees.
Long-term changes to employment in EuropeEurope’s labor market has experienced a long-term shift away from employment in manufacturing and other heavy industries, which have in many cases moved to lower-wage countries in developing region, and towards the service sectors of the economy. This de-industrialization, while affecting all regions of Europe throughout the 1980s and 1990s, as China emerged as the ‘workshop of the world’, has been most disruptive in western and southern Europe. Countries such as France, Italy, and Spain have been hit hard by the decline of legacy industries, such as automobile manufacturing, with the rising numbers of long-term unemployed people reflecting this. Countries in central and eastern Europe, however, have actually experienced re-industrialization since joining the EU, with Poland, Czechia, and Hungary embedding themselves into the supply chains of western European manufacturers, offering skilled workers with markedly lower labor costs.
The rise of the ‘knowledge economy’ – industries and sectors which focus not on material products, but on products such as digital or IT services – means that the skill set desired by employers in Europe has also changed. Employees are now more likely to be highly skilled than they were in the past, with a university education being a prerequisite for many jobs. In countries with declining populations, this has led governments to pursue retraining schemes in order to help workers move from ‘sunset’ industries into the growing industries of the 21st century, such as tech. Relatedly, the retirement age in Europe has risen over the preceding decades across Europe, partially an adjustment to longer life expectancies and the less strenuous nature of non-manual work, but also reflecting the growing dependency ratios in Europe, as the number of employed workers falls below the number of young people and people in retirement. In spite of this trend towards longer working lives, the average weekly hours of a full-time employee has seen a consistent decline over recent decades.