Why are millions of working people in Europe left out of the game, even though the economy needs hands and brains? In 2023-24, every eighth of the potential labor force in the EU countries is an unused resource. It is not only about official unemployment, but also about the invisible army of those who want to work more, but cannot. From seasonal employment in Spain to part-time contracts in the Netherlands, the European labor market turned out to be too varied to give a clear answer to the question: why so many people do not realize their labor potential? And what does this say about the future of the social and economic stability of the European Union?
12% of the working potential of the EU remains unused
In 2023-24, the level of hidden unemployment and underemployment in the EU amounted to 12% of the total workforce. This means that 27.1 million people aged 15 to 74 had labor resources that were not fully engaged. We are talking not only about the officially unemployed, but also about those who worked part-time, were looking for a job, but could not start immediately, or were ready to work, but were not looking for a job.
Infographic: IA “FACT”
What does this indicator mean?
The level of so-called “hidden unemployment” is one of the most important indicators of how efficiently the economy uses its human capital. It is not only about the formal number of jobs, but about the real ability of society to attract people to productive activities, where their potential is not just used, but developed.
The lower this indicator, the closer the country is to full employment, where everyone who wants to can work in their profession, with decent pay, stability and a sense of professional meaning. Conversely, a high level of hidden unemployment indicates not only economic imbalances, but also social frustration, loss of trust in the system, and a blurring of the connection between efforts and results.
In 2023–2024, the largest share among inactive workers was officially unemployed — 5.8% of the expanded labor force. Another 2.8% were ready to work, but for one reason or another were not looking for a job: these may be people who have lost faith in their own chances on the labor market or found themselves in conditions where looking for work seems pointless – for example, due to family care, illness, lack of support or chronic fatigue. Another 2.5% worked part-time, although they wished they had more hours. This is the so-called forced part-time employment, which often does not provide enough income to live on and is accompanied by anxiety about the future. And 0.9% are those who were looking for a job but could not start it right away, often due to institutional constraints or personal life circumstances.
All this forms not only economic statistics, but also a deep psychological picture. People who lose touch with the labor market or work below their potential often experience feelings of marginalization, devaluation, and loss of identity. In this state, the phenomenon of social derealization occurs — when even real problems lose clear outlines, and life seems to be “happening outside of you.”
The hidden unemployment rate is not just about the economy. It is about the mood of society, about confidence in tomorrow, about whether a person feels part of the social contract. And that is why its reduction is not only a task for employment policy, but also a challenge for all institutions responsible for people’s well-being and psychological stability.
Which countries have the highest level of idle labor potential?
In 24 EU countries, the largest share among all categories was the unemployed. The highest unemployment rate in the extended labor force was recorded in Spain (11.7%) and Greece (10.8%).
However, there were exceptions. The Netherlands (5.1%) and Ireland (4.5%) had the highest number of workers who worked part-time but would like more hours. And in the Czech Republic (3.2%) the largest share was occupied by those who were looking for a job, but could not start it immediately.
Overall, in 2023-24, the highest levels of hidden unemployment were observed in Spain (20.2% of the expanded labor force), Italy (17.7%), Sweden (16.4%) and Greece (16.3%).
Instead, the lowest level of idle labor potential was recorded in Poland (4.8%), Malta (5.2%), Hungary (6.0%), the Czech Republic (6.4%) and Slovenia (6.5%).
These indicators indicate significant differences between EU countries in the ability of the economy to attract available labor force, which is an important indicator of the stability of the labor market and the effectiveness of economic policy.
Differences in the level of inactive labor force between EU countries are caused by several key factors. Countries with a strong industrial sector and a high demand for labor (eg Poland, the Czech Republic, Hungary) have a lower level of idle potential. At the same time, countries with a large share of the service sector and seasonal work (Spain, Italy, Greece) suffer more from employment instability.
It affects unemployment rates and the level of flexibility of the labor market. In countries like the Netherlands and Ireland, the level of part-time employment is high. This may be the result of more flexible labor laws, when companies actively use temporary contracts and workers themselves choose part-time work more often.
Spain and Greece have traditionally high levels of unemployment, particularly among young people. This is due to structural problems of the labor market, bureaucracy and difficulties for young professionals in finding their first job. At the same time, Poland and the Czech Republic, which have a developed system of vocational and technical education and a policy of employment support, demonstrate the lowest level of idle potential.
In the countries of Central-Eastern Europe (Poland, Hungary) many citizens go to earn money abroad, which reduces the amount of idle labor force. At the same time, there is a high level of immigration in Spain and Italy, which increases competition in the labor market.
Countries with active public support for employment (eg, Germany, Poland) have a lower level of inactive labor force. At the same time, the situation is worse in countries with a high level of bureaucracy and low efficiency of employment programs (Spain, Italy).
Therefore, the difference between the EU countries in the level of the inactive labor force indicates not only economic heterogeneity, but also different approaches to regulating the labor market. Countries with effective employment programs, developed industry, and high demand for labor demonstrate a stable labor market, while states with unstable economies, high unemployment, and bureaucracy face difficulties in attracting all labor potential.
How much do they pay in the EU?
The level of wages in the countries of the European Union shows significant differences, even despite the general trend of growth. Data for 2024 show that the average European wage landscape remains economically heterogeneous, and the cost of one hour of work can vary fivefold depending on the country.
The lowest average hourly labor costs were recorded in Bulgaria (€10.6), Romania (€12.5) and Hungary (€14.1). For comparison, in Luxembourg, employers spend €55.2 per hour of work, in Denmark – €50.1, and in Belgium – €48.2.
The level of payment also differs significantly depending on the field of activity. In 2024, the average hourly wage in industry was €33.9 in the EU and €39.8 in the euro area. In construction – €30.0 and €33.4, respectively, in the service sector – €33.3 in the EU and €36.4 in the Eurozone. If public administration is not taken into account, the average indicator in the EU is €34.2, in the euro zone – €37.5.
Overall, in 2024, hourly labor costs increased by 5.0% in the EU and by 4.5% in the Eurozone. The highest rates were recorded in Croatia (+14.2%), Latvia (+12.1%) and Lithuania (+10.8%). The lowest labor price increase was observed in the Czech Republic (+1.3%), Finland (+1.8%) and Luxembourg (+2.1%).
Among EU countries that are not part of the eurozone, the fastest growth was demonstrated by Romania (+14.2%), Bulgaria (+13.9%), Hungary (+13.6%) and Poland (+12.8%). At the same time, the rate of increase was the lowest in Sweden (+3.6%).
Infographic: IA “FACT”
How much do they pay in Ukraine?
Against the background of these indicators, the Ukrainian economic situation looks quite modest: according to estimates in 2023, the average hourly salary in Ukraine was about €4–5. The main restraining factors remain the state of war, inflationary pressure, the reduction of industrial production and the diminution of the economy. However, some sectors – particularly IT, energy and finance – have seen a gradual increase in pay, indicating the presence of local points of stability and recovery.
The cost of labor is not only an indicator of economic activity, but also an indicator of the level of social development, regulatory capacity and the labor market. How effectively EU countries are able to convert economic growth into employee welfare will increasingly determine their competitiveness in the global dimension.
For Ukraine, careful observation of the dynamics of the European labor market is not only of statistical interest, but also a guideline for long-term reform of labor legislation, modernization of tax policy and attraction of investments in productive employment.
