Eurozone | Europe’s labour shortages – not all equal

Although reported labour shortages in the eurozone appear to be worsening, our analysis of the underlying dynamics shows a more nuancedicture. We think the shortages in manufacturing and services are more cyclical in nature and should ease faster, while those in construction appear more structural.

What you will learn:

• Severe labour shortages in manufacturing and services are occurring amid a strong cyclical rebound in demand, which we expect to revert to trend in line with forward-looking indicators.
• This is not the case for construction, where we expect demand to remain elevated.
• Both the manufacturing and services sectors can draw on untapped labour resources, as employment in each is still around 2% below pre-pandemic levels.
• Employment and vacancies in construction have already surpassed their previous peaks and scope for productivity gains is limited.