Despite the initial expectations of severe damage to labor markets due to the crisis, the impact has not been as dire. This is partly due to changing consumer preferences and spending behavior. In fact, employment rates have actually increased by 2.3% compared to pre-crisis levels, particularly in France and Spain. However, there has been a slow reallocation of labor in the Eurozone, which has resulted in sluggish productivity growth. Although unemployment rates have hit record lows (6.6% in January 2023), the adjustment in labor markets has been achieved primarily through reduced working hours rather than layoffs. This limited productivity growth may hinder a more meaningful recovery, especially in regions with limited labor-market flexibility and a shrinking workforce.
Learn more here: https://www.allianz.com/en/economic_research/publications/specials_fmo/eurozone-labor-markets.html
