Eurozone | Why the labour market will recover faster than usual

The eurozone labour market is heating up. We expect around 2 million jobs will be created from Q2 2021 until the end of the year, recovering almost two-thirds of the jobs lost since the coronavirus pandemic hit. Employment should return to pre-crisis levels by H2 2022, which is a markedly stronger performance than we had expected a few months ago.

What you will learn:

• The labour market has continually performed better than expected as the emergency measures introduced during the pandemic, including furlough schemes, prevented mass layoffs.
• Households’ unemployment expectations are now close to record lows and firms’ hiring intentions are elevated across industries. So, we expect labour market strength to continue into next year.
• We see some risks to the labour outlook. Prematurely withdrawing the emergency support could hurt economic sentiment and put firms’ liquidity under pressure.