Millions of people in the European Union are being left out of the EU labor market, even as the bloc struggles to close the productivity and competitiveness gap with the US.
According to Eurostat data, the so-called “slack” in the labor market, i.e. the percentage of the potential that remained unused, reached 12% in 2023.
The slack
More specifically, 27.1 million people aged 15 to 74 years in the EU were offering an unmatched supply of labor on the market, either because they were unemployed, underemployed, seeking a job even if not immediately available to work or immediately available to work but not seeking for.
Labor market slack helps understand how much workforce is available but not fully productive. It is used to analyze employment dynamics and the overall health of an economy, since a low slack suggests the economy optimally exploits the supplied labor input.
Among EU countries, in 2023, labor market slack was highest in Spain (20.2% of the extended labor force), Italy (17.7%), Sweden (16.4%) and Greece (16.3%). On the other hand, it was lowest in Poland (4.8%), Malta (5.2%), Hungary (6.0%), Czechia (6.4%) and Slovenia (6.5%).
