2024 Brings a Challenging Landscape: European Staffing Sector Faces Contraction Amid Economic Slowdown and Persistent Labor Market Tightness
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Grim outlook for the European staffing sector in 2024
After two years of above-average volume growth for the European temporary employment sector, that growth turned to contraction last year. For 2024, we expect the freeze on hiring temp workers to continue. Sluggish economic growth and staff shortages are the main challenges for the sector this year.
Slowdown in economic growth in most European economies
Economic and geopolitical uncertainties, combined with higher interest rates, are likely to soften economic growth in Europe this year. Both companies and consumers are taking it easier with investments and spending due to those higher rates and persistently high inflation. As a result, GDP growth in most European economies will contract slightly or grow only modestly in 2024.
Modest economic growth in most European economies in 2024
GDP growth, year-on-year
The European labour market remains tight
Despite an economic slowdown and a cooling of the labour market, unemployment will remain relatively high in most European economies in 2024. While vacancy rates will be slightly lower in 2024, many European economies continue to struggle with a tight labour market. This is not only due to an ageing population, but also because the average number of hours worked per person is still lower than before the pandemic.
Staff shortages could slow market volume growth in the temporary employment sector, as temp agencies experience more difficulties recruiting new employees. Based on the job vacancy rate, the labour market is tightest in Belgium and the Netherlands, with 5% of unfilled vacancies in the third quarter of 2023.
The labour market is tightest in Belgium and the Netherlands
Job vacancy rate, third quarter 2023, seasonally adjusted
