Labour market and wage developments in 2009

This report analyses labour market and wage developments as the impacts arising from the recession have taken a severe toll on the economic well-being of many European citizens over the past two years.

In the second half of 2008, the EU economy entered a recession that lasted the best part of 2009. The impacts arising from this recession have taken a severe toll on the economic well-being of many European citizens over the past two years. In the euro area alone, GDP contracted by 4% in 2009, unemployment surged, and public debt rose to unprecedented levels.

The report analyses how the labour market behaved over this period, focusing on the interaction with key macroeconomic variables such as productivity, wages and GDP. It also provides a detailed description of inflows into and out of unemployment during the crisis. The report contributes to the overall effort to upgrade the monitoring of macroeconomic developments in the EU and the euro area as recommended by the EMU@10 communication and by the communication on "Enhancing economic policy coordination for growth and jobs -Tools for stronger EU economic governance". To this end, it presents an analysis of the most recent trends and prospects on participation, unemployment and employment rates on the one hand and labour costs on the other. It also provides an input to the enhanced country surveillance and helps to address the future thematic challenges within the context of the Europe 2020 strategy.

Although the report concentrates on developments at euro area and EU27 levels, it also examines the situation in individual countries, specific policy measures taken to minimise the impact of the crisis and the challenges ahead. The report reviews the long-term policy challenges in light of the macro-economic environment created by the crisis and the need for fiscal consolidation. It includes also an extensive statistical annex that provides data on key labour market aggregates for each Member States.