During Q3, both France and Germany shed jobs (18,000 and 6,000 respectively), according to preliminary data. This phenomenon is relatively rare outside periods of crisis, such as 2009 or during the 2020 lockdowns.
This indicator is raising further alarm about an economic downturn. Demand has therefore become the main constraint limiting production in the eurozone during the second half of the year. This is the case for 25% of industrial companies and 18% of services companies in Q4, according to the European Commission survey.
Supply difficulties, which had previously loomed extremely large, have subsided. While they had been limiting the output of one in three eurozone manufacturing companies at the start of 2022, they are only affecting one in eight companies in Q4 2023.
Labour shortages have begun to ease at a more moderate pace for the time being, limiting the output of 14% of eurozone manufacturing companies in Q4 2023, compared to the Q3 2022 peak of 18%. At the same time, this figure has fallen from 25% to 18% in Germany, while in France, it was stable at 16%, a meaningful persistence.
In the services sector, there has been a widespread fall in the number of companies facing output limitations due to labour shortages (from 23% to 18% in the eurozone, from 33% to 25% in Germany and from 21% to 14% in France), indicating that falling demand is gradually reducing labour shortages.
However, there is still a high labour shortage in the eurozone in Q4, with twice as many companies, both in the industrial and services sectors, still affected compared to the historical average. With many European countries close to full employment, there is a structurally scarce supply of workers.
When labour needs change too fast, it is difficult to meet them. The aeronautics sector shed jobs in 2020 and is increasingly struggling to fill roles to meet strong demand, with 11% of companies on average having their output limited by a shortage of workers from mid-2022 to mid-2023, compared to 26% on average during the second half of 2023 (7% compared to 34% in France).
This issue of available skilled labour cannot be easily solved in the short term and affects other segments, as illustrated by the structural shortage of engineers, which could be a barrier to implementing European industry's greening policy.
