Unemployment in the euro area: Why is it so low and when will it start to rise?

Pavla Ruzickova

A chapter in CNB Global Economic Outlook - December 2023, 2023, pp 14-21 from Czech National Bank, Research and Statistics Department

Abstract: The economic situation in the euro area has not exactly been dazzling recently. Output is stagnating - production is being dampened by weakening external demand, and investment is being adversely affected by tightened monetary policy. Since the services sector has also weakened, the only admirable area of the economy remains the strong labour market. This article maps out, from various perspectives, the causes of the current record-low unemployment in the euro area. It discusses both cyclical and structural factors, and also provides a glimpse below the surface of the overall figures, focusing on the diverse developments across Member States. At the same time, it notes the emerging signs of an incipient cooling of the labour market in the euro area, now at a turning point. It therefore does not neglect estimates of near-term future developments.

Date: 2023
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