Job mobility and labour markets in Europe continue to be shaped by last recession ⁰

A new report from the European Foundation for the Improvement of Living and Working Conditions (Eurofound) claims that the recent global recession continues to have significant and lasting effects on Europe’s labour markets, including a big drop in employment levels and job mobility, which are yet to recover in many countries almost a decade later. It also affected the structure of employment, accelerating changes and patterns of job polarisation across Europe, in which employment in middle-paid jobs declined more than in jobs at the top and bottom of organisations.

The report claims to offer ‘a novel perspective’ for a better understanding of what happened to workers who lost their jobs in the recession – whether they were reallocated to other jobs or whether they moved into unemployment or inactivity – and whether opportunities for upward occupational mobility (or risks of downward mobility) were affected by the crisis. The analysis compares six European countries that represent different institutional clusters – France, Italy, Poland, Spain, Sweden and the UK.

Analysis of the flows between inactivity, unemployment and employment (differentiating five categories of jobs according to their average wages) shows very different patterns in the six selected European countries before, during and after what the report calls the Great Recession. The results make it possible to identify three different pairs of countries on the basis of the fluidity of their labour markets.

Sweden and the UK are similar in their employment and occupational flows, despite their very different socioeconomic models. Both countries show highly fluid labour markets, with significant flows not only between employment and unemployment but also between different categories of jobs (implying possibilities for occupational mobility). Levels of mobility remained high during the crisis, although this is probably the result of better general economic conditions (both countries are outside the euro area, and their employment levels have recovered faster than the other countries studied).

Mobility patterns in Poland and Spain suggest a dual labour market, with significant flows between unemployment and low-paid jobs, but few possibilities for mobility up or down the occupational ladder. Compared with Poland, the crisis hit Spain particularly hard, and its effects on unemployment risks were very strong in the middle quintiles.

Finally, France and Italy belong to a third group of countries with comparatively less mobile labour markets and little overall flow between jobs or employment status. The effect of the crisis on the transition patterns in these countries was relatively mild, although it did increase the chances of job loss and made between-quintile flows even less frequent.

This study analysed the mobility patterns that are behind structural changes in European labour markets before, during and after the Great Recession, linking ‘individual level trajectories of employment and occupations to changes in aggregate labour market stocks’. Different levels of fluidity in labour market transitions between employment status and occupational levels are associated with similarly broad patterns of structural change, leading to different implications for employment opportunities and ultimately life chances.

Overall, the key findings suggest very different patterns and levels of labour market flows in the six European countries studied. While a certain degree of occupational mobility in labour markets is probably desirable, to the extent that it is not limited to the lower occupational levels but allows the possibility of upgrading to better jobs, a proper evaluation of the actual implications of each type of transition for the individuals affected would be needed to draw sound policy implications. This would require expanding the analysis to the actual wage and income levels involved, the scale of unemployment benefits and other attributes of the social system.