Labour market and wage developments in Europe : annual review 2023

Almost two years after the start of Russia's war of aggression against Ukraine, the EU economy is faring better than initially expected. GDP growth in 2022 reached 3.5 % in both the EU and the euro area, compared with initial forecasts of respectively 2.7 % (EU) and 2.3 % (euro area) in Spring 2022. The exceptional measures put in place to support households and businesses, stabilise gas and electricity prices and reduce the EU's dependency on Russian fossil fuels have played an important role in this respect. Even though economic growth started to weaken from the second half of 2022 (with the euro area at the brink of a technical recession between the last quarter of 2022 and the first quarter of 2023), the EU labour market has proved to be particularly resilient. The EU unemployment rate stood at about 6 % throughout most of 2022 and in the first months of 2023 - the lowest rate ever recorded. Employment also continued expanding at an annual rate of 2 %, with the job vacancy rate reaching a record high and with many businesses reporting labour shortages. At the same time, the number of hours worked per person did not fully recover. Rather, it reverted back to its pre-pandemic, long-term downward trend.