Most European Union members, or at least a solid majority, are riding a current growth cycle that helps keep joblessness trending down. Yet, just as GDP growth has cooled from prior months, the drop in unemployment has also slowed. Data from Eurostat published this week show Germany and Spain as the main drivers of this cooling. Germany has moved from reducing unemployment to adding to it, while Spain, despite lowering its unemployment rate, has seen the pace of improvement markedly ease.
Across the 27 EU member states, unemployment totals roughly 13.25 million people, about 32,000 fewer than six months ago. The overall trend remains positive, though the rate of decline is notably less than in the first half of the previous year when unemployment fell by 230,000. This slower reduction, combined with a small rise in the labor force, has left the EU unemployment rate basically flat near 6% since early 2023.
Spain has long contended with unusually high unemployment relative to its neighbors. It has been steadily pulling its rate down, but the vigor seen last year has faded in 2024. In the first half of the year, Spain cut unemployment by 239,000 people, whereas this year the reduction stands at 43,000, five times smaller than the prior year.
Historically, Spain and Greece traded the top spot for the highest EU unemployment rates. Recent years, however, have seen Greece widen the gap modestly, though it has begun closing in. At the end of the first half, Greece succeeded in bringing its jobless rate below the double digits for the first time since 2009, to 9.6%. Spain remains at 11.5%, a level it has not left since 2008.
Germany, by contrast, has experienced a different trajectory. While Spain has slowed its progress, Germany has seen unemployment rise. In the first half of last year, German unemployment fell by 19,000; this year it increased by 90,000. The German economy is in recession, with four consecutive quarters of negative annual GDP growth. Still, Germany continues to report one of the lowest unemployment rates in the EU, at 3.4%, roughly half the EU average and about a third of Spain’s rate.
France presents the opposite trend within Europe’s major economies. Whereas last year’s first half saw rising unemployment in France, this year has brought a decline of 22,000 in the number of jobseekers in the January-to-June period compared with the prior year.
Looking east, the 2024 data show some of the eastern EU states posting the weakest unemployment results, with increases in Lithuania, Hungary, Estonia, Sweden, and Finland among others. Meanwhile, southern economies have continued to reduce unemployment, with Italy trimming 52,000 and Greece 46,000 in the period described.