What is the labour market?
The labour market is a crucial part of the economy that deals with the supply and demand for jobs. It includes everyone who is working, everyone who is looking for work and the availability of jobs from employers. Eurostat's statistics bring data together so we know how many people are working, (in employment) how many are not working and how many people are looking for a job.
Whenever you are looking for a job or even if you are already employed, you are automatically part of the labour market. This is an essential part of the economy that deals with the supply and demand for jobs. Employers represent the demand side, who are looking for people to hire who have the necessary skills and qualifications. Employees or job seekers are on the supply side offering their skills and qualifications in exchange for work and a salary.
Why is the labour market important?
- economic indicators: By collecting data on the labour market, we can learn about employment levels — how many people have jobs, how many are unemployed, and how many are seeking jobs. This data helps us understand the health of the economy.
- policy making: Governments use labour market data to create economic policies. For example, if many people are unemployed, the government might invest in job training programs or set up more job centers to help people find jobs.
- news and media: Labour markets are frequently discussed in the media. We often hear about companies hiring or laying off workers. The media also cover issues like short-term contracts and part-time work, which affect work-life balance or are because full-time jobs are hard to find.
The labour market can be seen from many different angles and people are included in the labour market in various ways. For example, some people may work part-time or on temporary contracts, either by choice or by necessity. This highlights the diverse nature of the job market and the different employment situations people face.
Overall labour market data provides valuable insights into trends and challenges in employment, and helps to shape decisions at both Government and individual levels.
Labour Force Survey
The main source of information on the labour market is the European Union (EU) Labour Force Survey (EU-LFS). This survey collects information on the labour market situation and covers people aged 15 years old and above It excludes people living in halls of residence, hospitals, old people’s homes, prisons or military barracks.
The EU-LFS currently covers 34 participating countries: the member states of the European Union, 3 EFTA countries (Iceland, Norway and Switzerland), and 4 candidate countries (Montenegro, North Macedonia, Serbia and Turkey). This means that all these countries provide Eurostat with data from their national labour force surveys and contribute to the calculation of comparable figures across most of Europe.
The EU-LFS is the principal source of information for analysing developments in EU labour markets and to study different work-related phenomena such as employment, unemployment, economic inactivity, hours of work, occupations and sectors of employment. It can also support socio-demographic analyses as information is collected and available by sex, age, education, household characteristics or region.
Labour market terminology
The EU-LFS is the largest European household sample survey providing quarterly and annual results. The people on the labour market are classified into three 3 main groups
- employed (currently have a job (work for pay) even if they work for 1 hour)
- unemployed (without a job and actively looking for work and are available to start working within 2 weeks)
- outside the labour force (someone who is not working and who is not looking for work. This category includes retired people, (non-working) students, caregivers who stay at home because of family responsibilities, people with disabilities who are unable to work and those who choose not to look for work for any other reason.)
The employed and the unemployed people – those who are available and able to work for money – are collectively known as the labour force or the economically active population.
Not being part of the labour force does not mean you are doing nothing, it simply means that you are not working for pay nor actively looking for a job.
Are students included?
Within the EU-LFS, pupils (aged 15 years or over) and students may be considered as part of the labour force if they are seeking work, are available to work or are working at least one 1 hour per week during the reference week the survey was conducted. In recent years an increasing share of students have combined their studies with work — this may reflect, at least to some degree, changes in the ways that higher education is funded in some EU countries. For pupils and students living away from home during the week or during the whole term, their family home is usually considered as their usual place of residence.
Are workers with a foreign citizenship included?
The EU-LFS collects information on the situation for all people above 15 years old living in private households. Someone with a foreign citizenship, i.e. a person who is not a citizen of an EU country - will also be included , if they officially live in the participating country. Cross-border workers – those who reside in one country and who commute to work in another country are included in the survey of the country in which they have official residence.
What is the activity rate?
The number of active members of the labour force (the employed and the unemployed) is used to identify the activity rate. This is the percentage of active members of the labour force compared to the whole adult population.
Statistics considers people between the ages of 15 and 64 as adult population and able to work. Across the EU, the majority of people within this age range are employed or actively seeking a job. Therefore, most people aged 15-64 are considered active people and thus inside the labour force, whereas the rest of the adult population is considered to be outside of the labour force.
Activity rates can also be calculated for specific groups of the population. For instance, it is possible to calculate activity rates for men and women separately, or for specific age ranges (younger/older working age people). When calculating these types of activity rate, only the specific population sample is used. For example, when considering the activity rate for women aged 15-64 years old, the population considered will be the adult population of women (15-64 years old), and the active members of the labour force will be a part of this same group of population.
In 2024, the number of people aged 15-64 years old in the EU was around 283 million. Of these, 213 million people were employed or unemployed. Therefore, the active members of the labour force represented about 63.8% of the adult population (activity rate), and the remaining 24.7% of people were classified as being outside of the labour force.
Labour market flows
As already mentioned people can be either employed, unemployed or outside the labour force – but their situation is not static. Life is constantly in motion and this can bring about changes in people’s activity status. For example, an unemployed person can find work and become employed. Or an employed person can decide to take a career break to care for a loved one, thus moving outside the labour force. All these movements are recorded as labour market flows and show the dynamic nature of the labour market. Monitoring these flows is important as they can be an early indicator of changing health of the economy.
Play with statistics
Do you want to test your knowledge on the labour market and other statistics? Take Eurostat’ s quiz and learn more about the EU countries in a fun way. You can test yourself, your friends and family, students and colleagues.
Click on the icon below, choose your language and get started!
Explore further
Other articles
Related articles in Statistics 4 beginners: