30 million jobs added to EU labour market over past 30 years

Europe’s labour market has witnessed a significant expansion, adding nearly 30 million net new jobs since 1995, even as the EU working-age population has contracted by nearly 10 million since 2009. This remarkable growth, which occurred despite significant demographic headwinds, reveals a profound and ongoing transformation.

This growth has not, however, been accompanied by an associated boost in productivity, with the EU experiencing a more profound slowdown in productivity than other developed regions. This poses challenges for the bloc in terms of competitiveness and economic growth.

Eurofound’s new report Structural change in EU labour markets: A generation of employment shifts details a dramatic rebalancing of employment away from traditional industries towards a burgeoning service economy. Between 1995 and 2024, the share of employment in manufacturing, agriculture, and extractive industries declined across all 27 Member States. In the case of construction, there are nearly two million fewer workers in the sector today than before the global economic crisis.

This contraction has been more than offset by the exponential growth of the services sector, which now accounts for nearly three quarters of EU employment.

The most powerful driver of this change has been the occupational upgrading of the workforce. The share of professional employment in the EU doubled from 11% to 22% between 1995 and 2023. This trend has been particularly strong since 2011, with jobs in the top pay quintile accounting for all net employment growth in the EU from 2019 to 2024. A notable contributor to this growth has been the increased participation of women, who have taken up more than two-thirds of the net new jobs created since 2000, significantly narrowing the gender employment gap.

This structural evolution, however, has not been without its paradoxes, particularly related to productivity. Productivity growth, as measured by the total value added per worker, has steadily decelerated since 1995, with the EU experiencing a more rapid slowdown than the United States, particularly within private services. The report also notes significant differences in productivity within the EU itself, with Member States that joined after 2004 witnessing ongoing increases, in contrast to those that acceded before that date, where growth has stalled.

The report concludes that Europe’s challenge is to translate its human capital improvements into a renewed era of productivity. Policy should focus less on the spectre of technological unemployment and more on making work attractive and high quality to increase labour supply, especially from under-represented groups.

The forthcoming Union of Skills initiative, for instance, aims to foster innovation and sustainable growth by improving skills and their portability. Managing this transition effectively will be critical to ensuring Europe’s labour market remains both productive and inclusive.

• Download the report: Structural change in EU labour markets: A generation of employment shifts