EU employment situation and social outlook

Transcription

1 EU employment situation and social outlook May

2 CONTENT HIGHLIGHTS... 3 I. SITUATION AND OUTLOOK LABOUR MARKET TRENDS RESTRUCTURING TRENDS ECONOMIC CONTEXT AND OUTLOOK... 9 II. SPECIAL FOCUS LATEST DEVELOPMENTS AND EXPECTATIONS IN SELECTED MEMBER STATES SELECTED SECTORAL TRENDS: GREEN JOBS IN THE RENEWABLE ENERGY SECTOR SOCIAL SITUATION TRENDS

3 HIGHLIGHTS Latest data covering the period up to April 2009 show that EU labour markets continue to deteriorate in reaction to the economic crisis. Unemployment is rising, job vacancies are still falling and companies continue to announce substantial job reductions across several sectors. While the outlook for the coming months remains bleak, there are some tentative signs emerging that the pace of decline may be moderating. There has been a fall-off in the announced number of job losses in March and April compared to previous months, while, although remaining pessimistic, business and consumer confidence started to rebound in April, showing the first significant improvement in two years. Overall business and consumer confidence remain at low levels and firms' employment expectations, although showing tentative signs of improving over the last one to three months in all sectors except services, still remain strongly negative. Further deterioration in the labour market situation can therefore be expected in the months ahead. This negative outlook is supported by recent forecasts released by the ECB, IMF and OECD, and Business Europe, as well as the latest Commission forecasts released in May, all of which adjusted downwards their previous forecasts and paint a rather gloomy picture for economic and employment prospects in the near future. The latest Commission forecast expects EU employment to contract by 2.6 % in 2009 and by a further 1.4 % in 2010, which equates to about 8½ million job losses for the two years, while the unemployment rate is set to increase to almost 11 % by 2010, with particularly marked rises in the Baltic States, Ireland and Spain. Overall unemployment in the EU increased by a seasonally-adjusted 0.6 million in March, rising above the 20 million mark and reflecting rises in unemployment rates in almost all Member States. The March rise is in line with the recent stronger pace of rising unemployment, which has increased markedly since last September. Recent data and national reports indicate that job vacancies, although still significant in number, have been falling in reaction to the downturn. Furthermore, announced job losses in April continued to outweigh those relating to job creation, although with a continued fall-off in the announced number of job losses and a substantial decline in the overall net job loss (being at its lowest since the sharpening of the global economic crisis began last September). At sectoral level, the manufacturing and financial services sectors continue to be the hardest hit by recent announced job reductions. It remains the case that so far men have been affected by the downturn more than women, reflecting that many of the sectors hit hardest are predominantly male-oriented in terms of employment. As a result the previously significant gender gap in unemployment rates has disappeared. At the same time there has been a continued strong rise in unemployment among young people, with young men being particularly affected, highlighting a rising need for support to tackle youth unemployment. The report also highlights that long term unemployment may be expected to rise in the months ahead. It also stresses that being unemployed has potentially very different consequences in terms of poverty and living conditions across the EU, and that the capacity of social protection systems to address the rising demand for social security varies greatly across Member States. This month's report includes a special focus on the renewable energy sector, as an example of a sector with positive employment prospects in view of the development of the green economy in Europe. The results of a recent research study projects that the number of jobs in the renewable energy sector could double by 2020 and reach a level of 2.8 million. This monthly monitoring report responds to the need to monitor the impact of the current economic crisis on different sectors, as announced in the Commission Communication "From financial crisis to recovery" (COM (2008) 706), and to a more general need for timely information on labour market developments. It is not a detailed analytical document but rather a situation update on recent developments and the outlook concerning employment, which makes use of a wide range of sources of more timely data. Some of the data may be of lower quality and less harmonised than usually reported in Commission analysis (for example the data is not all fully harmonised across Member States), but it is more up-to-date than generally available from most of the standard statistical sources. A wide combination of information sources have been used to produce this report, including Eurostat statistics, reports and survey data from the Commission Directorate General for Economics and Finance, national and sectoral statistics, restructuring data from the European Restructuring Monitor (collected by the European Monitoring Centre on Change) and articles from respected press sources. The report has also benefited from preliminary contributions from public and private employment services. The section on restructuring trends has been prepared by the European Foundation for the Improvement of Living and Working Conditions. 3

4 I. SITUATION AND OUTLOOK 1. Labour market trends Chart 1: Unemployment rates for the EU Latest data 1 covering the period up to April 2009 confirm that EU labour markets continue to deteriorate in reaction to the economic downturn. Unemployment continues to rise, particularly affecting men and young people, while job vacancies are falling and companies continue to announce job losses in several sectors. While the outlook for the coming months remains bleak, there are some tentative signs emerging that the pace of decline may be moderating. There has been a fall-off in the announced number of job losses in March and April compared to previous months, while business and consumer confidence, although remaining pessimistic, started to rebound in April, showing the first significant improvement in two years. Chart 2: Youth unemployment rates for the EU The EU unemployment rate has been rising for a year, with strong increases among men and young people... The unemployment rate in the EU continued to rise sharply in March, confirming that, although on an upward trend since the March of last year, the pace of rising unemployment has increased markedly since last September. After a large 0.3 percentage point (pps) rise in February, the rate increased by a further 0.2 pps in March to reach 8.3 %, 1.6 pps higher than the low of 6.7 % in March 2008 (Chart 1). Total unemployment rose to a seasonally adjusted 20.2 million (21 million non-adjusted), an increase of (or 3.2 %) compared to the previous month and of 4.1 million (or 25 %) compared to one year earlier. The increase in the overall unemployment rate continues to be driven predominantly by the rise in the rate for men, while the rise for women has been more moderate. In March the rate for men rose by a further 0.3 pps (following two months of similar strong increases) compared to a rise of 0.1 pps for women. One consequence of this development is that the gender gap in unemployment rates, previously at 1.4 pps in the beginning of 2007, has now disappeared, as for the first time male and female unemployment rates became equal in March. This continues to reflect that so far many of the sectors hit hardest by the downturn, such as construction, the car industry and transport and storage, are predominantly maleoriented in terms of employment. Young people aged under 25 have been the age group whose labour market situation has been affected most by the downturn. The youth unemployment rate has been increasing since April 2008, and strongly so since last October. The strong rises have continued over the start of this year, with 0.5 pps increases in each of the first three months, leading to a rate of 18.3 % in March. Chart 3: Unemployment rate changes to March 2009 Youth unemployment reached a seasonally adjusted 5 million, an increase of (or 3.2 %) compared to the previous month and of 1 million compared to March Underlying the recent increases have been sharp rises in the unemployment rate for young men, which have been much more pronounced than the rises for young women (Chart 2). As a result of these recent developments, by March the improvements achieved since early 2005 in reducing the unemployment rate for young men had effectively been wiped out. 4

5 Chart 4: Unemployment rate changes March March 2009 Chart 5: Unemployment rates, March 2009 Unemployment rates rose in almost all Member States in March Unemployment rates have been on an upward trend for at least half a year in all the larger Member States, and in March they continued to rise, most substantially by 0.9 pps in Spain and by 0.2 pps in the others (Chart 3). Compared to a year ago (when unemployment in the EU was at its lowest in recent times) the unemployment rate is now substantially higher in Spain (up 7.9 pps), noticeably up in France and the UK (by 1.2 and 1.5 pps respectively), but is also now slightly higher in Germany and Poland (up pps), reversing the still positive situation of previous months in those particular two countries (Chart 3 & 4). Except for Austria (where the unemployment rate remained unchanged compared to February) all the remaining Member States (for which data for March is available) saw their unemployment rates increase in March, with the sharpest rises (of 1-2 pps) in the Baltic States (Estonia, Latvia and Lithuania). Compared with 12 months earlier, unemployment rates have risen in the majority of Member States, with, in addition to Spain, the most substantial rises (of the order of around 5-11 pps) being in the Baltic States and Ireland. By March only three Member States still had lower unemployment rates compared to a year ago, namely Bulgaria, Greece and Romania. In Spain unemployment has risen dramatically over the last year and alone accounts for around 40% of the total rise in unemployment in the EU since the crisis began last October. The unemployment rate reached 17.4 % in March (with underlying unemployment at a seasonally adjusted 4.1 million), double the EU average and the highest in the EU. In France the rate remained slightly above the EU average, at 8.8 % (equivalent to 2.6 million unemployed). For the other larger Member States, the March rates in Poland and Germany remained below the EU average - in Poland it edged up to 7.7 % (1.3 million unemployed) and in Germany to 7.6 % (3.3 million) - while in Italy it was at 6.9 % (1.7 million) in the last quarter of 2008 and in the UK at 6.6 % (2.1 million) in January Among the remaining Member States, the unemployment rate in March was highest in Latvia and Lithuania (more than 15 % in both) and Estonia, Ireland and Slovakia (all with rates above 10 %), but in contrast remained particularly low in the Netherlands (2.8 %) (Chart 5). However, the EU unemployment rate continues to be less affected by sharp declines in demand and business confidence since mid-2008 than in the US Despite stronger falls in business confidence in the EU than in the US since last spring, increases in the EU unemployment rate have been much less dramatic. Indeed, by March the unemployment rate in the EU had increased by 1.6 pps compared to one year earlier, while in the US it had increased by a more marked 3.4 pps. As a result the unemployment rate in the US is now higher than that in the EU (Chart 6). 5

6 The relatively limited impact so far in the EU reflects the usual lag of about 2-3 quarters before the sharp acceleration in the economic downturn in October feeds through to the labour market but also an increased use of internal flexibility (e.g. short-time working, temporary suspension of production) which has allowed firms to use various means of internal adjustment rather than reduce their workforce. The latter has especially been the case in countries such as France and Germany (the announced number of shorttime workers in Germany has climbed from nearly in December 2008 to in March 2009). In the EU the difficulties in finding people with the right skills have encouraged employers to try to hold on to the experienced workers they have, but the longer the downturn continues the more difficult this will be to maintain. The relative resilience of the EU labour market, resulting from a combination of more rigid labour markets, skill shortages, application of internal adjustment measures and longer term concerns over a shrinking labour force, may weaken if the economy continues to contract and no signs of an improvement are forthcoming in the near future. Chart 6: Unemployment rate and Business Confidence Indicators (BCI) Chart 7: Unemployment rates and expectations for the EU while consumer's fears of increased unemployment faded significantly in April However, some initial signs that the downturn is perhaps reaching the bottom have been observed recently. In April consumers started to feel relatively more confident about the general economic situation and reported reduced expectations for the level of unemployment in the year ahead. Consumer unemployment expectations decreased by 1.6 points, the first drop for two years and marking an end to the pronounced rises recorded since September 2008 (Chart 7). However, the unemployment rate continued to edge up in line with the prior worsening expectations, and is expected to deteriorate further before the lagged effect of the turnaround in consumers' expectations, and any associated upturn in economic activity, takes hold. Chart 8: Number of hours worked invoiced by private employment agencies for selected Member States Job vacancies are still falling Levels of job vacancies continue to decline strongly. According to the Manpower Employment Outlook Survey 2, hiring intentions for the second quarter of 2009 again worsened, generally down of the order of 2 4 % across most Member States surveyed compared to the first quarter of 2009, but with particularly marked declines in Sweden (down 10 %) and Romania (down 20 %). Of the countries surveyed in Europe, only employers in Poland, the Netherlands, Austria and Belgium are reporting positive, but modest, second-quarter hiring activity. On a year-on-year basis, all countries report a weakening in hiring intentions, with several countries recording double-digit declines. The declining trend in labour demand is confirmed by official sources. For instance in the UK latest data from its vacancy survey show that in the three months to March job vacancies were down (or 13 %) on the preceding quarter, and around (or a third) on the year, with particularly strong declines in vacancies in manufacturing (down 55 % on the year), construction (down 52 %) and finance and business services (down 43%). Nevertheless overall vacancy levels remain quite high at In Germany the Federal Employment Agency's job index (BA-X) fell by another 2 points to 135 points in April, after having already dropped 4 points in both February and March, and 7 points in 6

7 January. Although overall labour demand in Germany has now fallen below the level of spring 2006, the number of vacancies is also still quite high, with around jobs available. Temporary agency work is still being hit particularly hard by the downturn. Recent data 3 from Eurociett generally covering February or March shows a continued sharp year-on-year contraction in the number of hours invoiced by private employment agencies of between 23 % and 33 % in the Netherlands, Italy, Belgium and France (all slightly worse declines than last month's reported figures), and of 42 % in Spain (a slight improvement on last month's reported decline of 52%) (Chart 8). In the UK, agency billings for the employment of short-term workers fell for an eighth successive month in March, reflecting weak demand for staff and lower activity at client businesses. However, the reduction was the lowest since last October, suggesting an easing in the decline in temporary billings. Chart 9: Employment expectations across sectors for the EU Chart 10: Announced job losses and creation in the EU and firms still expect to reduce staff levels overall, although the decline appears to be bottoming out as employment expectations show a relative improvement in all sectors except services Firms' employment expectations for the months ahead generally remain unfavourable, although the broad downward trend observed since late 2007, and which accelerated between October 2008 and January 2009, has levelled out in most sectors over February and March and even turned upwards in April, with expectations improving across all sectors except services (Chart 9). Chart 11: Announced job losses in selected Member States Moreover, the employment outlook in industry improved for the first time since late 2007, and continued to improve in construction. Employment expectations also improved slightly in retail trade and picked up in financial services, and only worsened significantly in the services sector compared to March. Nevertheless, while employment expectations have shown tentative signs of improving over the last one to three months in all sectors except services, they still remain strongly negative. 2. Restructuring trends In April, there were lower levels of restructuring activity reported in the European Restructuring Monitor (ERM 4 ) data collected by the European Monitoring Centre on Change, partly reflecting that monthly reporting levels tend to decline in the month that Easter falls as a result of public holidays. Nonetheless, the fall-off in the announced number of job losses recorded in March continued in April, as did the trend of reducing overall net job loss. Announced job losses continue to outnumber announced job gains, but with net job losses down substantially In April, the ERM recorded announced job losses and new jobs in 91 major restructuring events. The job loss figures represent a sharp fall-off from the recent peak levels of over job losses recorded in December 2008 and January 2009 (Chart 10). Although there were more than twice the number of restructuring cases involving job losses as job gains, the overall net job loss was the lowest it has been since the 7

8 sharpening of the global economic crisis last September. In terms of the composition by restructuring type, internal restructuring accounted for around threequarters of announced job loss in the most recent five months. Bankruptcy/closure continues to represent a greater share of announced job losses than the long-run average (23% v 15%) while the shares attributed to offshoring, relocation and merger/acquisition have fallen (Table 1). with large job losses recorded in the UK Table 1: % of announced job losses by type of restructuring Table 2: ERM announced job losses by NACE-2 sector (Dec 08-Apr 09) Ten cases of announced job loss were recorded in the UK in April, involving nearly job losses. Six cases were recorded in Poland, Germany, France, Ireland and Spain. Overall, in the five months to the end of April, 882 restructuring cases were reported which involved job loss (compared to 199 of job creation). These cases involved cumulative losses of jobs (Chart 11). Manufacturing and financial services continue to be the sectors reporting the highest number of job losses Chart 12: Announced job losses across sectors in the EU In April, manufacturing accounted for 60% of announced job losses recorded in the ERM ( out of a total of ). Within the broad category of manufacturing, the specific sectors most affected were automotive (3 600 jobs) and other transport equipment (1 700 jobs). Significant job losses were also announced in the financial services sector (3 000 jobs) (Chart 12). Over the last five months, the ERM has recorded job losses in manufacturing, approximately half of total job losses. Similarly, retail, financial services and transport/communication are other sectors having recorded substantial job losses. Broken down at NACE 2-digit level, over the same period, retail is the sector with the largest volume of job losses ( job losses, over half accounted for by the closure of the Woolworths chain in the UK). The largest number of cases were recorded in the automotive sector (122) while the median size of restructuring job loss was largest in financial intermediation (Table 2). Chart 13: Announced job creation across sectors in the EU In April, the largest restructuring cases involving job loss (excluding World/EU cases, i.e. national cases only) were in: Mining: Kompania Weglowa (Poland, jobs) Manufacturing: Vestas wind systems (1 275 jobs in Denmark, in EU), Bombardier (975 jobs, UK), Schmitz Cargobull (850 jobs, Germany), Treves (600 jobs, France) Telecoms: Eircom (Ireland, jobs) Insurance: Aviva (UK, jobs) Financial services: Lloyds TSB (UK, 985 jobs) while the biggest cases of announced job creation were in recycling and utilities There were 24 cases of announced job creation in April including 10 in the manufacturing sector and 5 in real estate/business activities and in retail. Two single large-scale restructuring cases account for nearly of the announced job creations recorded during the month (Chart 13). 8

9 In April, the biggest cases involving job gains were in: Recycling: Veolia Environnement (France, at least jobs) Utilities: Electricity Supply Board (Ireland, jobs) Retail: Auchan (Portugal, jobs) and Esselunga (Italy, 800 jobs) Manufacturing: Renault Dacia (Romania, 500 jobs) Chart 14: Industry production for the EU Over the last five months, the sectors to benefit most from announced job creation have been retail ( jobs) followed by manufacturing ( jobs). 3. Economic context and outlook Chart 15: Industrial new orders for the EU The EU has been in recession since the third quarter of 2008, and most EU Member States have either slid into recession or are in the process of doing so The EU economy has clearly suffered from the ongoing global economic crisis. After several quarters of economic slowdown and two quarters of GDP decline, recession in the EU deepened in the fourth quarter of 2008, when economic output contracted by a substantial 1.5 % quarter-on-quarter. This sharp decrease mostly reflected weak capital spending and declining exports. Compared to a year earlier, economic activity was down 1.4 %. Within the EU, fifteen Member States had officially entered recession by the fourth quarter of last year, namely Denmark, Estonia, Finland, Germany, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Spain, Sweden and the UK. By the end of 2008, the economy had continued to expand only in Cyprus, Greece, Poland and Slovakia. Industry output continues to contract, as do new orders... In February industrial production contracted for the tenth month in a row, falling by 2.1 % compared to the previous month, a slightly lower pace than in the preceding four months (Chart 14). The decline was driven by significant falls in Germany (though less than in January) and in Italy, and reflects marked decreases in production across all sectors but especially for intermediate goods, capital goods and consumer durables. A drop of over 2 % in output for capital goods was nevertheless smaller than the decline in January, while in contrast reductions in output for intermediate and non-durable consumer goods, and especially for durable consumer goods, were significantly stronger. In a longer term perspective, year-on-year growth in industrial production has fallen for the ten months to February and remains on a sharp downward trend. Industry output has declined strongly (by 17.6 %) compared to February 2008, mainly reflecting strong declines in production of intermediate, capital and durable consumer goods of the order of 20 % or more. Overall, the negative tendency in industrial output continues to reflect ongoing uncertainty and risk aversion, tighter credit conditions affecting domestic demand and a fall in foreign demand. Latest figures for the EU show that industrial new orders fell by 1.4 % in February after declining by 3.5 % in January, drops which were nevertheless significantly smaller than those of the last few months of 2008 (Chart 15). This mainly reflects a substantial slowing of the decline in new orders for intermediate and capital goods over recent months, supported by a recent increase in new orders of non-durable consumer goods. Nevertheless, on a yearly basis new orders have generally been on a downward trend since the middle of 2008, and by February were down 33.3 % compared to a year earlier....while construction output dropped again after the short-lived rebound in January... After rebounding slightly in January, production in the construction sector contracted again in February, falling by 1.6 % compared with the previous month (Chart 16). This reflected a marked drop in construction output in Spain (down 5.3 % on the previous month after a strong turnaround in January) which more than offset moderate expansion in Germany and Poland. Year-on-year growth in construction has remained generally negative or negligible since last March and dropped to % in February, reflecting the particularly strong falls over 9

10 the past year in construction output in Germany, Spain and the UK....and retail trade turnover declined strongly. Chart 16: Construction production for the EU After showing signs of improving in January, turnover in the retail trade sector dropped significantly in February (down 0.9 % on the previous month), mainly driven by a strong deterioration in trade turnover in Spain and the UK. Consequently, after remaining negative since October, but showing some tentative signs of improvement in the previous two months, year-on-year growth in turnover slipped back sharply to -2.9 % (Chart 17)...but more recent figures indicate economic sentiment started to rebound in April, posting the first noticeable increase in two years Chart 17: Retail trade turnover for the EU More recent data on the EU Economic Sentiment Indicator (ESI) show that in April confidence picked up for the first time since May 2007 (excluding the small blip in March 2008), with the indicator rising by 3.5 points to This upturn follows a previous long period of continuous strong falls, which were particularly marked from October to December last year before slowing from January to March (Chart 18). The improvement at EU level reflected rises in sentiment across the majority of Member States. Among the larger Member States, Italy, Poland, Spain and the UK witnessed significant improvements in sentiment, while the rise was less marked in France and Germany. Chart 18: Economic Sentiment Indicators (ESI) and confidence indicators for the EU The April rebound resulted from a clear improvement in sentiment in industry and among consumers, together with a smaller increase in services. Retail trade sentiment also increased for the EU as a whole, while in contrast sentiment in the construction sector continued to decline further. Sentiment in financial services (not included in the ESI), improved markedly compared to March, reflecting a significant improvement in managers' assessment of the business situation and their expectations of demand for their services (which became positive for the first time since last October). Outlook Economic and employment forecasts continue to downgrade the outlook Commission spring forecast (May 2009) 5 In the latest spring Commission forecast, EU GDP is projected to fall by 4 % this year (a downward revision of some 2 percentage points compared with the January interim forecast) and to broadly stabilise in 2010 as the impact of fiscal and monetary stimulus measures kick in. The economic downturn is expected to be broad-based across Member States, but particularly severe in Ireland and in the Baltic States (Chart 19). Among larger Member States, Germany and Italy face the strongest contraction in 2009 (of 5.4 % and 4.4 % respectively), while for France, Spain and the UK it is expected to be slightly more moderate (around 3 4 %). Employment contraction foreseen for all Member States except Luxembourg in 2009 Labour markets will be severely affected by the downturn. Employment growth in the EU (and in all Member States except Luxembourg) is expected to turn 10

11 negative this year, with overall employment contracting by 2.6 % in 2009 and by a further 1.4 % in 2010 (Chart 20). This equates to about 8½ million job losses for the two years, in contrast to the net job creation of 9½ million during All larger Member States face declining employment in 2009, especially Spain (where employment is expected to contract 5.3 %), while particularly strong falls (of around 7 9 %) are foreseen for the Baltic States and Ireland. Even countries with a traditionally strong labour market performance such as Denmark, the Netherlands and Sweden face noticeable employment contraction in 2009 and Chart 19: Forecast real GDP growth Unemployment rate expected to increase substantially in EU, and to rise all Member States The EU unemployment rate is set to increase by about 4 pps in the coming two years to 9.4 % in 2009 and 10.9 % in Between 2008 and 2010, rates are projected to increase in all Member States, the most marked rises being in the Baltic States, Ireland and Spain (all up 8 10 pps), which are all facing substantial downturns in (construction) activity (Chart 21). The strong increase in unemployment in Spain is projected to lead to an unemployment rate in excess of 20 % by 2010, while rises should also be fairly substantial (2-5 pps) in all the other larger Member States. Chart 20: Forecast employment growth Other recent forecasts The Commission forecast of clear negative trends for 2009 is in line with other recent international forecasts. Most forecasts currently available point towards a sharp economic downturn in 2009 and to a longer path to recovery than previously expected. Chart 21: Forecast unemployment rates In its latest world economic outlook released in April, the IMF forecasts that global economic activity will shrink by 1.3 % in 2009 but recover to 1.9 % in For the euro area, GDP is forecast to decline by 4.2 % in 2009 and 0.4 % in 2010, while the unemployment rate is expected to rise to 10.1 % in 2009 and 11.5 % in These projections for the euro area are very much in line with those recently published by the OECD in March. In its spring economic outlook report, Business Europe also now forecasts a much more significant effect on labour markets in 2009 than previously expected. Against a predicted fall in EU GDP of 2.2 %, it now forecasts that employment in the EU will decrease by 2 % this year (or 4.5 million, with almost 2 million job losses accounted for by Spain and the United Kingdom alone) and unemployment rise to 9 %. In percentage terms, the deterioration in employment is expected to be particularly severe in Estonia (down 11.2 %), Ireland (down 7 %), Spain (down 5.4 %), the United Kingdom (down 2.8 %) and Belgium (down 2.6 %). A recent joint forecast by leading German economic research institutes foresees economic output in Germany declining by a strong 6 % in 2009, a figure recently confirmed by the government's own latest forecast. Furthermore, the EU's largest economy is not expected to experience a dramatic recovery in 2010, with GDP expected to continue to decline by 0.5 % (although, in contrast, the government predicts a return to modest growth of 0.5% in expectation of a recovery in exports as the global environment stabilises). Unemployment is expected to rise to 3.7 million, or 8.6 % of the labour force, in 2009 and 4.7 million (10.8 %) in 2010, all of which will have a strong impact on developments for the EU labour market as a 11

12 whole. The government's forecast predicts a similar rise in unemployment of next year to 4.6 million. The OECD's composite leading indicator (CLI) for the Euro area and aggregate of the four largest EU Member States has shown continued, strong deterioration in the economic situation since mid-2007, but with some tentative signs of stabilization observed in January and February (Chart 22). Chart 22: Composite leading indicators In February the CLI declined by only 0.2 points in the Euro Area and remained stable in the group of four largest EU Member States, while in the US it dropped by a sharper 1.1 points. Compared to a year earlier, the two former aggregates had registered a decline of 8.2 and 7.5 points respectively, compared to a stronger 11.8 points for the US. These results continue to indicate an ongoing, deep economic recession, with continuing impacts expected on the labour market and levels of employment and unemployment, but also some initial signs that the economic crisis may be bottoming out as downward pressure on the economy begins to slow. 12

13 II. SPECIAL FOCUS 1. Latest developments and expectations in selected Member States This section provides an overview of recent developments and forecasts at the Member State level. This time the focus is on reviews of the labour market situation in Austria, Denmark, Hungary, Italy, Romania and the UK. Priority has been given to the most recent reports and forecasts (dating from March or April 2009) from reliable sources at the country level. Austria Data provided by the Austrian public employment service (AMS Österreich Bundesgeschäftsstelle) indicates that the number of registered unemployed fell to around in April, having peaked in January and February at just over , but remains over 25 % higher than a year ago. The prior upswing in registered unemployment from September 2008 to February 2009, and which was particularly marked in the period November-January, reflects strong underlying variation between genders while the level of registered unemployment has risen strongly for men until recently (remaining up around 56 % in April 2009 compared to levels in September 2008, and almost 40 % compared to April 2008) the rise for women has been much more muted (up around 24 % in April 2009 compared to levels in September 2008, and 13% compared to April 2008). Indeed, for women registered unemployment remained fairly static from November to March, before rising substantially in April. In term of age groups, the increase in registered unemployment has been particularly strong among youth, for whom unemployment had risen by close to 40 % year-on-year by March. Nevertheless, despite the jump in unemployment since last year, Austria still has one of the lowest unemployment rates in the EU, which at 4.5 % in March was second only to the Netherlands and which remains substantially below the EU average (8.3 %). Job vacancies have declined sharply in line with the deteriorating labour market situation by April the level of vacancies was down by a third compared to the same month in the previous year. At the same time there has been a significant rise in recent months in the number of people in short-time working arrangements, particularly among men, with employers applying for about persons between January and March Compared to most other Member States, Austria's economy has so far been relatively unscathed by the global economic crisis, as evidenced by only a marginal (0.2 %) contraction in GDP in the last quarter of However, the global economic downturn is having a major effect on Austria's external trade sector, with exports down by around 25 % in January year-on-year. Foreign sales of machines and vehicles, the country's most important export products, have been severely hit in recent months, leading to announcements of job losses in car and parts manufacturers Eybl International, General Motors Powertrain Vienna, KTM Power Sports, and Mahle-König. The April IMF world economic outlook forecasts that the unemployment rate in Austria will remain relatively low in the coming years, rising to 5.4 % in 2009 and 6.2 % in 2010, still well below the predicted EU average and reflecting a much weaker recession than in most other Member States. The latest Commission forecast paints a similar picture, although with unemployment expected to rise to a slightly higher level of 7.1% by Denmark In March 2009, Denmark's unemployment rate (at 5.7 %) was the sixth lowest in the EU. Denmark's jobless rate has consistently been one of Europe's lowest, but looking back at the situation a year ago, when it had the second lowest rate in the EU (then at 3 %), the picture is less positive. Denmark's seasonally-adjusted unemployment rate has been rising over the last six months, a trend mainly affecting males, with the year-on-year increase reaching 2.5 pps by March, and 4 pps for men only. Arbejdsmarkedsstyrelsen (the Public Employment Service) recently announced that the number of job vacancies has declined by close to half in the two years since March This deterioration in the labour market has happened in a context of economic recession, which affected Denmark faster than many other EU countries. Danish GDP declined by 1.8 % in the last quarter of 2008 (-1.1 % for the whole year), and growth is expected to shrink by 2 % in 2009 according to the Danish National Bank (DNB). This nevertheless remains optimistic compared to the latest Commission and IMF forecasts (which expect GDP to contract by respectively 3.3 % and 4 % in 2009, with a possible moderate recovery in 2010 to growth of %). The DNB now expects Danes to be unemployed at the start of 2011, compared to the previously forecast. This would mean more than doubling unemployment by the end of 2010, compared to what it is today. The latest Commission's spring economic forecast predicts a similar trend, with the Danish unemployment rate expected to rise to an average of 5.2 % in 2009 and 6.6 % in 2010, up from 3.3 % in Looking to the recovery, in its report the World Economic Forum points to information technologies (IT) as the way out of recession, and Denmark, together with Sweden, tops the world ranking for its IT use. On top of this, Denmark's leadership in green technologies, and renewables in particular (see the related focus in the following selected sectoral trends section), is bound to support its economy further in the coming months. (However, this bright prospect has recently been tempered by the Danish wind power giant Vestas announcing job cuts in northern Europe in the coming months, due to recently slumping demand.) Moreover, the Danish flexicurity model is designed to allow companies to adjust to market conditions, by combining a high degree of labour market flexibility and security, supported by one of the most advanced welfare systems in the world. 13

14 Hungary In Hungary unemployment only started to rise significantly in November By February 2009 it had reached 9.2 %, i.e. 1.6 pps above the level recorded a year earlier. Hungarian Statistics reports registered jobseekers in the fourth quarter of 2008, i.e more than a year earlier. According to the Hungarian Public Employment Service, registered unemployment did not recede in March this year, contrary to the usual pattern of a decline following a seasonal peak in February. There were registered jobseekers at the end of March 2009, up 3.8 % compared to the previous month and 22 % year-on-year. Such high figures have not been observed since May 1994, when registered unemployment reached a high. Hungary has been one of the Member States hit hardest by the global financial and economic crisis, as its GDP shrank by 2.5 % year-on-year in the last quarter of 2008 alone, while its currency also dropped substantially, inflating bank and household foreign debt. The main cause of the economic deterioration has been the weakening of exports, badly affecting its manufacturing sector and contributing to a year-on-year fall of 22.9 % in industrial output by January The government predicts that the economy will shrink by a further 3.5 % this year. However, some analysts now predict the slide could reach 4 to 5 %, if European markets remain under pressure. The latest IMF forecasts for GDP growth are indeed on the down side: -3.3 % in 2009 and % in The Commission's recent forecast predicts an even stronger 6.3 % decline in GDP in 2009, moderating to a 0.3 % contraction next year, while the unemployment rate is projected to reach 9.5 % in 2009 and 11.2 % in 2010, up from 7.8 % in The new government has pledged to cut spending and to raise taxes to contain deficits. The measures, which also include significant changes in the social and pension system, could allow the country to aim for euro adoption between 2012 and 2014, according to the government. But decreasing wages and waning purchasing power raise concerns as to their negative impact on domestic demand and short-term recovery. Italy In Italy the labour market is clearly being affected by the economic recession there, which intensified in the fourth quarter of 2008 with a sharp contraction in GDP (down 1.9 % on the third quarter, largely due to a fall in exports (mainly automobiles, chemicals and electrical appliances) and investments). Unemployment started to increase in mid-2008, reaching 1.7 million by the fourth quarter and with the unemployment rate at 6.9 % (up 0.2 percentage points on the previous quarter and 0.5 percentage points on a year earlier). More recently, the number of requests for unemployment benefits submitted to the National Institute for Social Security in the first quarter of 2009 increased sharply compared to a year earlier. In January and February more people registered for unemployment assistance, (46 %) more than in the same period of last year. Overall employment began to shrink, contracting by 0.1 % in the fourth quarter of 2008, most significantly in industry and in business related services. In order to avoid lay-offs firms or institutions have continued to apply measures such as "short weeks", partial employment (for example as at Fiat), solidarity contracts or use of the Wage Supplementation Fund. For example, in the first quarter of 2009 the number of hours authorized for the Wage Supplementation Fund in non-construction industry increased further, with workers on ordinary wage supplementation reaching 3.3 % of the total, the highest level since Similarly, the use of partial unemployment in industry in February 2009 was five times higher compared with February 2008 (and as much as ten times higher in the iron and steel sector). Despite such measures, the results of a recent quarterly survey conducted by the Bank of Italy and Il Sole 24 Ore in March show that about a third of firms expect to cut staff, mainly by suspending recruitment and labour turnover, by not renewing fixed-term contracts, and only to a small extent by applying collective dismissals or early retirement incentives. In the beginning of the year, the Bank of Italy predicted that, taking into account government measures to support demand, GDP will fall by 2 % in 2009 and return to growth of 0.5 % in 2010 when it is expected to benefit from a recovery in international trade. Recently however, the think-tank Prometeia, the OECD, the EU Commission and the IMF all forecast a stronger GDP decline of % in 2009 and of around % in 2010 before a slow recovery emerges in The IMF and the OECD predict that the unemployment rate would rise steeply to % in 2009 and to % in 2010, while the recent Commission forecast expects a slightly lower increase to 8.8 % in 2009 and to 9.4 % by In March, the government announced new measures to tackle the crisis, including an increase in allowances for the reintegration of project workers with a sole contractor, an increase in grants for precarious employees, accelerating the process of providing social assistance, the possibility for unemployed to accept small jobs without losing their benefits, and financing for unemployment allowances and partial unemployment measures taken by companies and for infrastructure works which would create jobs. Romania According to the National Institute of Statistics, employment in Romania started to decline from last autumn to edge down to 4.7 million in February 2009, down by on January 2009 and (down 1.7 %) on a year earlier. The largest reductions over the year occurred in manufacturing (down or 9.9 % for that sector) and construction (down or 4.7 %), while the health and social assistance and the wholesale and retail sectors expanded the most (up and , respectively). Unemployment has generally been decreasing since mid and had reached a seasonally adjusted by the 14

15 end of 2008, equivalent to an unemployment rate of 5.8 %. However, indications are that unemployment is now on the rise again. According to the National Agency for Employment (ANOFM), registered unemployment has been increasing since mid-2008, with the most pronounced rises since December, and reached by March 2009 (up on the previous month and by on a year earlier). The registered unemployment rate (relative to the total civil population) reached 5.6 % in March, up from 4.1 % in March 2008 and a low of 3.7 % in July In the beginning of the year, the Labour Ministry, in consultation with the IMF, estimated that by the end of 2009 there may be more unemployed. The number of intended lay-offs communicated by firms to the ANOFM increased significantly from in September 2008 to in January 2009, with the associated number of persons benefitting from pre-lay-off services (such as information on the legal provisions for the protection of the unemployed and for the granting of employment and vocational training services, information on vacancies available at local level and training in jobsearch techniques) rising from to Employers have started to post fewer offers for new jobs - the job vacancy rate fell to 1.5 % in the fourth quarter of 2008 from 1.8 % a year earlier and from 2.1 % in the third quarter of ANOFM reports a sharp decrease since October 2008 in vacancies communicated by employers to government agencies. It registered vacancies in January 2009, less than in September and less than a year earlier. Contrary to most of the other Member States, the economy still expanded in Romania in the last quarter of Nevertheless, in response to the global crisis, there has subsequently been a sudden slowdown, resulting from a decrease in domestic consumption which accompanied the decline in exports and a drop in foreign financing. Recently, the Commission and the IMF projected that GDP would decline by around 4 % in 2009 before stabilising in The Commission forecast expects unemployment to increase to 8 % in 2009 before declining to 7.7 % in The United Kingdom The UK economy has so far been one of the hardest hit by the economic downturn, which has brought higher unemployment, lower house prices and falling industrial output. Unemployment continues to rise sharply, recently reaching 2.1 million, the highest in more than a decade. The national unemployment rate figure averaged 6.7 % over the three months December-February, up 0.6 percentage points from the previous three-month period and 1.5 percentage points on a year earlier. This reflects an underlying rise in unemployment on the previous quarter of , and year-on-year of almost half a million. At the same time the level of demand in the labour marked has declined strongly according to the Office of National Statistics' (ONS) monthly vacancy survey, the number of job vacancies was down to an average of in the first quarter of 2009, a drop of (or 13%) from the previous quarter and from a year earlier (i.e. a drop of one third). While compared to a year earlier the number of vacancies is down across all sectors, the falls have been particularly marked in manufacturing and construction (both down by over a half), and finance and business services. Only the education, health and public administration sector has recorded a relatively moderate decline. According to the ONS the economy contracted by 1.6 % in the final quarter of 2008, following a decrease of 0.7 % already in the third quarter. Recently released data indicate GDP contracted even more strongly in the first quarter of 2009 (by 1.9 %), with the increased rate of decline due to weaker services and production output, especially in manufacturing. Despite the marked deterioration in the economy over recent months, there are some tentative signs of possible improvement in economic activity in the months ahead. The rate of contraction in Britain's service sector eased in March to its slowest for six months while business confidence improved to its highest since August last year, before the collapse of Lehman Brothers. Nevertheless, the outlook for the labour market remains pessimistic. The recent Commission and IMF forecasts both foresee the unemployment rate rising to above 9 % by In its latest forecast, the Confederation of British Industry (CBI) forecasts that the recession will ease in the second quarter of this year and return to modest growth in the second half of 2010, although it warned that the recovery will be "slow and fragile". It expects unemployment to continue to worsen over the coming year, rising above 10 % in the first quarter of next year and peaking at 3.25 million in the second quarter of In the recent budget speech the UK Chancellor forecast the UK economy would contract by 3.5 % this year, with the economy expected to return to growth by the end of the year and growth of 1.25 % forecast for The government indicated it will adopt a more activist industrial policy, targeted towards growth industries, to drive recovery. Regarding the labour market, more resources have been put into public employment services, including additional funding which will allow to recruit an extra staff. In addition, from April 2009 extra help became available for jobseekers who have been unemployed for six months or more, including allowing employers access to a recruitment subsidy and Government funded training when they recruit someone who has been out of work for six months. Concerns are rising about youth unemployment in particular recent figures released by the ONS indicate that people under the age of 25 account for almost 40 % of total unemployment. In response the government has also announced it is taking further action to address this. Further resources (including a 1.1 billion "Future Jobs Fund") will be targeted on job-schemes covering the under-25s as a key target group, including working with employers and local authorities to create new jobs, and from early in 2010 everyone under 25 will receive a job offer or training place before they reach the 12-month stage of being out of work. 15

16 2. Selected sectoral trends: green jobs in the renewable energy sector This section reports on the positive employment prospects in the renewable energy sources sector ("renewables") 6. Further developments concerning Germany, the world leader in renewable energy development, and the wind energy sector are presented as a guide. Green jobs According to the definition of the ILO, green jobs are those that contribute appreciably to maintaining or restoring environmental quality and avoiding future damage to the Earth s ecosystems. Such jobs can be found in sectors ranging from agriculture through manufacturing, construction and transport, as well as scientific, technical, administrative, and servicerelated activities. They include jobs that reduce energy and water consumption through high-efficiency strategies, help develop a low-carbon economy and minimise generation of all forms of pollution. Even considering only a very narrow definition of green jobs in 'eco-industries' (those mainly active in pollution prevention and treatment), this sector employed 2.3 million workers in the EU in Using a broad definition, which also takes into account activities closely dependent on a good quality environment (e.g. environment-related tourism, sustainable forestry, organic agriculture and renewable energy), induced multiplier effects, all agriculture and renewable energy sources as a whole, etc., then green jobs accounted for 21 million workers in the same year, equivalent to no less than 10 % of the EU's workforce (EC figures). Renewables sector: current situation and perspectives Renewable sources of energy include wind, solar (photovoltaic (PV) and thermal), hydro-electric and tidal power, as well as geothermal energy and biomass. They form an essential alternative to fossil fuels and contribute to increasing security of energy supply as well as to reducing greenhouse gas emissions. Although renewables currently account for a small part of all the green jobs, the sector has a high potential to create employment. In 2005, the renewable energy sector employed 1.4 million people across the EU, i.e. 0.7 % of the total EU workforce, and generated 58bn of value added (0.6 % of EU GDP). Employ-RES, a recent research project supported by the European Commission, found that under current policies, total employment in the sector would amount to roughly 2.3 million jobs in 2020 and 2.8 million jobs if accelerated deployment policies were to be implemented, namely in the framework of the new directive on the promotion of the use of energy from renewable sources. In other words, by increasing the yearly capital expenditures for new renewables by 50 %, the sector's current employment figures would virtually double. Skilled jobs are expected to account for about a third of the net employment growth. In this context, Germany s renewables industry recently expressed concerns about companies suffering from a shortage of qualified employees, and especially those needed in knowledgeintensive positions. So did organisations in other MSs, including the Confederation of British Industry, referring to the case of sectors going green which are struggling to find technical specialists, designers, engineers and electricians. In coming decades, this ambitious policy, which involves, among other things, efforts on the part of national governments, the European Investment Bank and the creation of a new 2020 Fund for Energy, Climate Change and Infrastructure, can be expected to create a large number of new jobs. The European Union (EU) has been at the forefront of renewables development over the last decade. In 1997, it adopted a goal of doubling the share of renewable energy to 12 % by In 2001, the EU s Renewable Electricity Directive set a goal of increasing the share of renewables in electricity generation from 14 % in 1997 to 21 % by The new directive on renewables sets legally binding targets for all Member States and stimulates them to reach a share of 20 % of energy from renewable sources by 2020, against 8.5 % in These efforts are supported by the ongoing European Economic Recovery Plan, which puts a particular emphasis on speeding up the shift towards a low carbon economy, in order to limit climate change, and on promoting energy security. This strategy encourages innovative technologies, "greening" of EU investment, and consequently the creation of so-called "greencollar jobs". However, according to the European Restructuring Monitor, whereas most surveyed restructuring cases relating to green jobs involved business expansion in 2007 and in the three first quarters of 2008, recent cases suggest that the economic downturn is also having some impact on the renewables sector. Still, growth appears robust in specific sub-sectors, such as biofuels (4 000 new jobs at Cargill in France at the end of last year) and solar cell manufacturing (1 100 jobs to be created at Bosch and Ersol Solar Energy in Germany by 2010). Effects at national level: the case of Germany Germany is a recognised leader in renewables development. The country s share of the world market for renewables production equipment and components was 17 % in Roughly one in three of every wind turbine and solar photovoltaic cell in the world is German-made (2006 data). Some companies - many of them small and medium-sized - can be found in the renewables sector, 16

17 half of them in solar energy, about in biomass, in wind power and 500 in the geothermal field. According to detailed studies commissioned by the German environment ministry (BMU), Germany currently has jobs related to renewables, while workers in environmental protection total 1.8 million. Deputy economy minister Astrid Klug has said the number of jobs in renewables will triple by 2020 and reach by 2030, in the wake of Germany's twin 80bn stimulus package, which combines tax cuts with infrastructure investments focusing on climate protection and energy efficiency. In a shorter-term perspective, the government recently announced that strong growth in Germany's renewable energy sector along with increased state spending for environmental protection could help shorten the recession. Wind energy market outlook Wind, together with biomass and hydro-power, is the renewables sector which employs the most people. A recent study by the European Wind Energy Association (EWEA) revealed that the wind energy sector alone now employs people across Europe. Of this total, turbine and component manufacturing account for 59 % of direct employment, wind farm development for 16 % and installation operation and maintenance for 11 %. Utilities and power providers account for a further 9 %, while consultants and research and development make up 4 %. the growth of wind energy are accurate, EWEA estimates that by 2020, direct employment in the wind power sector will have more than doubled to people. Up until 2025, EWEA estimates that onshore wind will continue to account for the largest share of this employment market, but after this, offshore could become dominant. In the period, among all renewables, wind energy had the highest annual growth rate (39.8 %) in terms of EU-27 primary renewable energy consumption. Between 2000 and 2005 though, it has been outstripped by PV solar sources, a more recent technology, which enjoyed a 66.5 % annual growth rate while wind energy's annual expansion declined to 26 %, which nevertheless remains remarkable for this longestablished and relatively cheap technology. The findings of the previously-mentioned Employ-RES study confirm that such a strong increase in wind power, as well as PV and thermal solar technologies, could significantly contribute to raising employment in the future. Germany, Denmark and Spain account for close to 75 % of all wind energy jobs in Europe. Germany (which produces 7 % of its electricity from wind power and has produced more than half of the onshore wind turbines installed in the EU) is the leader in wind energy employment, accounting for nearly direct jobs, rising to if indirect employment is included. The country with the second highest number of wind energy jobs ( people employed directly) is Denmark, which benefits from its position as a wind energy pioneer and global manufacturing hub. With Germany, Denmark leads the world in turbine production, accounting for around 29 % of all the turbines installed worldwide in 2007, while Danish offshore wind capacity remains the highest per capita in Europe. Spain too has seen a significant jobs boost from its wind energy sector, which directly employs nearly people. France and the UK rank fourth and fifth, with and direct jobs respectively, followed by Greece and Ireland, with and jobs respectively. According to the EWEA, current levels of employment are only a fraction of what can be expected in coming years. In 2008, wind power became the largest source of renewable energy in Europe. The EWEA forecasts a growth in Europe's total installed capacity from 64 GW in 2008 to 180 GW in 2020 and 300 GW by Using this baseline scenario, and assuming predictions about 17

18 3. Social situation trends Chart 23: Unemployment rates by age for the EU For the second time this year, this section focuses on a selection of regular key socio-economic indicators available for potentially vulnerable target groups. It must be pointed out, however, that most of the standard poverty and social exclusion indicators are not sufficiently timely to allow for up to date monitoring of the direct social impact of the crisis. Due to their vulnerability in relation to the labour and commodities markets, a special focus is placed on young people, older people, women, foreign nationals, and low-income households. The results available for the fourth quarter of 2008 already show that indeed a number of groups are being hit more severely by the crisis. Chart 24: Unemployment rates by nationality for the EU Unemployment has increased most strongly among young people, men and migrants As anticipated, the economic downturn hit first and foremost young people (i.e. those aged under 25). Youth unemployment - which started to rise in the beginning of continued to follow this upward trend in the last quarter of 2008 (up 1.6 pps compared to the end of 2007) and increased even more strongly in the first quarter of 2009 (up 3.2 pps compared to a year earlier) (Chart 23). However, the impact of the economic downturn is now also beginning to show among prime age workers, for whom the unemployment rate increased by 0.5 pps compared to the end of Due to the more pronounced recent rises in the unemployment rate for men than that for women, the gender gap narrowed quickly over 2008 and had vanished by March Chart 25: Long-term unemployment share for the EU In the last quarter of 2008, the rise in the unemployment rate was steepest for non-eu nationals (Chart 24), one of the most vulnerable groups on the labour market. Their unemployment rate has been at least 7 pps higher than that of nationals over recent years, the gap widening significantly to 8.5 pps in the last quarter of 2008, while it has been only around 2 pps higher for other EU-nationals. with an increasing risk of long term unemployment Chart 26: Temporary employment for the EU As unemployment is increasing significantly, the duration of unemployment spells needs to be closely monitored. The long-term unemployment share (i.e. the percentage of unemployed people who have been unemployed for more than 12 months) has been decreasing overall (down 7 pps compared to the end of 2007). This reflects the favourable labour market situation that prevailed before the crisis, but this will not last as those who lost their jobs in the second half of 2008 will not easily get back into employment and longer term unemployment may therefore be expected to rise. The downward trend had already levelled out among young people by the end of 2008 and therefore 18

19 needs to be closely monitored (Chart 25). The longterm unemployment share among older workers (at 51 % in the last quarter of 2008) has started to rise sharply in a number of countries (Belgium, Italy, Hungary, Portugal and Slovenia). This could be a sign that older workers are staying in unemployment thereby remaining on the labour market - rather than taking early retirement. Chart 27: At-risk of poverty rates of the unemployed for the EU while the share of temporary employment has been broadly stable, but more variable for youth The proportion of various age categories in temporary employment has so far remained fairly stable over time, but with more marked fluctuations characterising the group of younger workers. However, as it is anticipated that the latter group will be the most affected by reductions in this and other forms of atypical work, a close watch needs to be kept on this indicator as well (Chart 26). Chart 28: Material deprivation and risk of poverty for the EU Rises in unemployment may have different social effects across Member States, since poverty and living conditions vary Unemployment rates are rising in all EU countries, but not all Europeans are on an equal footing to face the consequences of the crisis. While data on trends in poverty are not yet available for the period after 2007, it is nevertheless possible to highlight that being unemployed has potentially very different consequences in terms of poverty and living conditions across the EU. On average, the risk of poverty faced by the unemployed is 42 % in the EU against 15 % for the adult population as a whole, and varies from 26 % in Sweden to 55 % or more in the UK and the Baltic States (Chart 27). Chart 29: Social protection expenditure and GDP growth for the EU On average, 16 % of the EU population is at risk of poverty, a situation that is likely to prevent people from participating fully in society. At-risk-of-poverty rates range from 10 % to 26 % in the EU, but living on low income in comparison to one's own country's standards hides very different social realities across Europe. The EU recently adopted a new indicator on material deprivation designed to better highlight this reality. It measures the proportion of people whose living conditions are severely affected by a lack of resources. For instance, these people cannot afford to pay their rent, mortgage or utility bills, keep their home adequately warm, face unexpected expenses, eat meat or proteins regularly, go on holiday, or cannot afford to buy a television, a fridge, a car or a telephone. All EU countries are hit by the crisis, but in some countries situations of hardship are more widespread, and some populations are likely to be more severely affected by the economic downturn than others. In Slovakia, Hungary, Lithuania, Poland and Latvia, more than one third of the population see their living conditions severely affected by a lack of resources, meaning that they face at least 3 out of the 9 problems mentioned above (Chart 28). Joint effort by the Commission and the Member States to monitor the social impact of the crisis Earlier this year, the Commission engaged in a joint effort with Member States to monitor the social impacts of the crisis. Available national data showed that the number of recipients of unemployment benefits had started to increase. Furthermore, most Member States expect increased pressure on last resort schemes as people currently covered by unemployment 19