Navigating turbulent times: resilience and recovery in EU regional labour markets 

Despite the challenges posed by the COVID-19 pandemic and geopolitical tensions, EU labour markets have shown remarkable resilience and a robust recovery. The Great Recession led to prolonged unemployment and regional disparities, especially in southern economies like Greece and Spain. In contrast, the COVID-19 pandemic saw a rapid employment recovery due to public and monetary support, notably short-time work schemes, and to adaptability to remote work. Eastern EU countries have significantly narrowed employment rate gaps with north-western regions, benefiting from EU membership, single market access, and substantial EU funding.
Detailed analysis in the second chapter of the 9th Cohesion Report (2024), reveals dynamics shaping regional labour markets and social situations across the EU. This data story focuses on resilience and recovery of EU regional labour markets.

Impact of economic shocks over the last two decades

Over time, the EU has made significant progress in reducing disparities in employment and unemployment rates between its regions and Member States, indicating a positive trend towards regional convergence in labour market  outcomes. As disparities in economic development have narrowed, so too have disparities in employment opportunities between regions at different stages of development. Of particular note is the significant narrowing of the employment rate gap between the north-western and eastern EU countries, suggesting significant progress towards coherence in labour market participation across the EU. (Figure 1) This exceptional progress highlights the importance of EU membership and access to the single market, which has boosted trade and investment, as well as the substantial EU funding specifically targeted at improving infrastructure, and human capital in the eastern EU countries.

Remarkable progress in eastern EU countries

Over the past decades, the EU has experienced significant economic shocks of different nature, each of which has left its mark on the economic landscape of the region. The aftermath of the Great Recession was characterised by a prolonged decline in employment levels and a sharp rise in unemployment, exacerbating social inequalities and widening regional disparities within the EU. Southern economies, including Greece, Spain, Portugal and Italy, faced notable challenges in recovering from the recession, with job losses and economic stagnation persisting for years.
In contrast, a small dip at the beginning of the COVID-19 pandemic was quickly overcome, with employment levels exceeding pre-pandemic levels and reaching historic highs in most EU regions. The relatively small impact can be attributed to the extensive use of short-time work schemes in the EU. The rapid turnaround could be attributed to several factors, including unprecedented fiscal stimulus, monetary policy support and the resilience of certain sectors to adapt to remote working and digitalisation.


Figure 1: Employment and unemployment by type of EU regions, 2008-2022 
TIPS: 
- Select a region from the drop down list at the top left of the chart. 
- Download data in a csv file using the menu at the top right of the charts.

Unprecedented decline in unemployment

Disparities in labour market outcomes have narrowed across NUTS 2 regions since the Great Recession. Many regions, including those in Greece, Spain, France, and Italy, experienced double-digit declines in unemployment rates between 2013, the peak, and 2022, including of a rapid recovery after the COVID-19 pandemic.
By 2022, regions such as Dytiki Ellada, Dytiki Makedonia, Attiki, Voreio Aigaio, Kentriki Makedonia (EL), Calabria (IT), Guyane (FR) and Extremadura (ES) saw unemployment rates fall by at least 4 percentage points compared with pre-pandemic levels.

On the other hand, the regions of Východné Slovensko (SK), Eesti (EE), Tirol (AT), Etelä-Suomi (FI), Panonska Hrvatska (HR) and Auvergne (FR) recorded a maximum increase of 1 percentage point, Comunidad Foral de Navarra, Ciudad de Ceuta (ES), Liège, Hainaut (BE), Észak-Magyarország (HU), Östra Mellansverige (SE), Sud-Muntenia, Sud-Vest Oltenia, Nord-Est (RO).


Unemployment as a challenge with two major impacts

Firstly, despite improvements, pockets of high unemployment persist in certain regions, with unemployment rates reaching 15% in Thessalia, Dytiki Makedonia (EL), Sicilia, Campania (IT), Extremadura, Canarias, Andalucía (ES), La Réunion, Guadeloupe (FR) and exceeding 25% in Ciudad de Melilla, Ciudad de Ceuta (ES), Mayotte (FR). (Figure 2) Regions with persistently high unemployment need targeted interventions and support mechanisms to address the underlying structural challenges, promote job creation, improve access to education and training and strengthen social inclusion in order to boost economic growth and reduce unemployment.
Second, thanks to improvements, excessively low unemployment became a new kind of challenge. The unemployment rate fell to 2% or less Střední Čechy, Praha, Jihovýchod,
 Jihozápad (CZ), Niederbayern, Trier (DE), Közép-Dunántúl (HU), Lubuskie, Pomorskie,  Warszawski stołeczny, Wielkopolskie (PL), Oost-Vlaanderen (BE). (Figure 2) Regions with low unemployment face growing challenges such as labour and skills shortages, exacerbated by demographic change and the ongoing digital and green transitions.
In the face of these contrasting challenges, ensuring the resilience and adaptability of the labour market is crucial, especially in anticipation of future economic shocks and technological advances. Investing in education, training and skills development initiatives, as well as promoting innovation and digitalisation, especially in green sectors, can strengthen the ability of the labour market to cope with turbulent times and ensure the resilience and recovery of EU labour markets.
Figure 2. Unemployment rates and changes by NUTS2, 2007-2022
TIPS: 
- Select a year from the list: 2007, 2010, 2013, 2016, 2019, 2022. 
- Zoom and click on the map to select a region and see the region unemployment rate.
- The maps of the Outermost Regions can be seen under the globe icon.  


More information and data sources

This data story is extracted from the 9th Cohesion Report on Economic, Social and Territorial Cohesion in the European Union, (2024). Find out more about the Cohesion Report on this webpage.
For more information on EU Cohesion policy go to Inforegio and to Kohesio for information on projects supported.
Author: Magdalena GRZEGORZEWSKA, Mattia PIERDICCA
Date of publication: June 2024