Labor market tightness across Europe and what businesses can do

From my office in the Netherlands, the world of work has changed dramatically around me. In the past year, Dutch companies have dutifully shaken off the economic downturn forced by the pandemic, hiring at a rapid pace to keep up with elevated demand. While this has been welcomed news for those who were previously looking for work, it’s been a mixed bag for their employers, thanks to a record number of job vacancies that now outpace the number of unemployed workers within our country.

?Employers across Europe are feeling the pressure, too. According to a recent survey by UWV, an employee insurance agency, 1 in 3 entrepreneurs indicate that they experience bottlenecks in their business operations precisely because of the tight labor market. We’ve seen this trend playing out throughout Europe and beyond, where international companies like Ikea have been forced to cut back their hours in a bid to keep their stores adequately staffed.

?Amid the tightest labor market in a lifetime, AgileOne’s Workforce Solutions Market Overview, Edition 4 offers a deeper dive into the economic conditions impacting key European countries. And it goes one step further, offering solutions for companies in need of out-of-the-box thinking to not only cope with—but stay ahead of—trends that keep employees happy, productive, and sticking around.

?Key trends by market

Across Europe, the average unemployment rate among EU 27 countries dipped to 6% in July. This is the lowest rate in at least 15 years, surpassing the periods leading up to both the 2008 and 2020 recessions.?Although low unemployment, coupled with a job vacancy rate that approached 3 percent in the first quarter of 2022, has created a tight labor market in Europe, these conditions are still considerably more favorable for employers than in the United States.

?In a sign of just how varied the European labor market is today, the conditions vary widely by country. Among the Nordic countries of Sweden, Finland, Denmark, and Norway, Sweden’s unemployment rate exceeds most European Union countries at 7.6%. Even with such high relative unemployment, the country is still experiencing historically high job openings, with nearly 200,000 jobs sitting unfilled. Meanwhile, Denmark’s unemployment rate is among the lowest in the European Union. Since the beginning of 2022, it has hovered consistently around 2.5 percent, its lowest level in 14 years. It’s a sign of how resilient the Danish economy is, even in light of the fallout from the war in Ukraine and the threat posed by global inflation.

?In the Netherlands, the economy recovered quickly from the economic crisis caused by the COVID-19 pandemic. Even though many measures were still in place in 2021 to contain the spread of the virus, the economy actually grew by 4.8 percent that year, according to data compiled by the European Commission. Meanwhile, the number of job vacancies is on the rise, reaching 467,000 people in the second quarter of 2022. This is a record high, according to the Centraal Bureau voor de Statistiek, and it means there are now 143 vacancies for every 100 unemployed individuals—up from a rate of 78 vacancies per 100 unemployed just one year prior.

?Germany has one of the lowest unemployment rates within the European Union, with an unemployment rate that is less than half of the average for all EU 27 countries. 2.9% of the labor force (15- to 74-year-olds) were unemployed in July 2022 according to Destatis, Germany’s statistics office. Meanwhile, the number of job vacancies is approaching 900,000—a significant spike from December 2020, when the number of unfilled positions dipped to 570,000 amid the pandemic. Together, these trends point to a highly competitive environment for employers in a country that was already home to one of Europe’s tightest labor markets prior to the COVID-19 pandemic.

?Finally, like much of Europe, unemployment in the UK is near historic lows. From May to July 2022, the unemployment rate was 3.6%, which represents a 0.4 percent decrease over pre-pandemic levels and the lowest rate since 1974. Meanwhile, the number of job vacancies from June to August 2022 was 1,266,000, a small decrease of approximately 34,000 from its peak in March to May 2022. Since vacancies fell to at least a two-decade low from April to June 2020 amid COVID-19 lockdowns, they have increased by more than 930,000 in a little over two years. As a result, the UK is experiencing the same tightening labor market that is impacting much of the Western world, forcing restaurants to close and causing travel issues at airports.

?No matter your market, AgileOne is positioned to help companies succeed within today’s complex, changing world. In preparation for our Workforce Solutions Market Overview, Edition 4, we scoured dozens of reports and hundreds of data points to present a complete picture of the challenges facing businesses today, including historic inflation and labor market tightness. In the pages of the report, we share our findings and unpack how companies can embrace cutting-edge solutions to ride the tide of movement with grace and ease.

?Download AgileOne’s Workforce Solutions Market Overview, Edition 4 now!

?Top five takeaways:

1. Record job vacancies are hurting global economies: The causes are complex and not only limited to disruption caused by the pandemic. Other factors include slow growth in the working age populations of some economies, a global shift in geopolitics that is sealing off job markets from immigrant workers, and a growing share of workers who lack the skills needed to fill scores of unfilled positions.
2. To stay ahead, companies must embrace talent mobility: Talent mobility describes the movement of employees between positions to meet a company’s evolving needs. Companies that implement talent mobility strategies are in a better position to attract skilled talent and curb attrition.
3. Talent mobility comes in many forms: It includes reskilling, upskilling, and hiring for skills. These strategies offer many benefits for companies, allowing them to constantly review and adapt their workforce as conditions change while empowering employees with new skills that keep them happy, productive, and sticking around.
4. AgileOne can help: Leveraging our award-winning suite of technologies and services, AgileOne is equipped with the tools to help you reduce risk and drive cost savings. This includes our managed services program (MSP), which allows companies to gain critical insights into their workforces.
5. Consider contingent—a flexible option for uncertain times: Contingent arrangements, like those offered by AgileOne, can provide long-term value for companies that recognize the potential for these workers to adapt to their evolving needs.

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