Tracking Developments in the Euro Area Labour Market through Restructuring Announcements
Prepared by Claudia Foroni and Nikolaos Papadatos, this analysis is featured in the ECB Economic Bulletin, Issue 4/2026. The focus here is to explore the potential of media-reported firm-level restructuring announcements, both job reductions and job creations, to serve as more timely indicators of labour market dynamics in the euro area compared to traditional statistical measures.
The research leverages the European Restructuring Monitor (ERM), a comprehensive dataset constructed by the European Foundation for the Improvement of Living and Working Conditions (Eurofound), which meticulously tracks restructuring announcements across EU Member States and Norway since 2002. A restructuring event is categorized when at least 100 jobs are impacted or when the workforce affected constitutes a minimum of 10% of establishments with more than 250 employees. These events must materialize within nine months of their announcement and are classified into various types, including internal restructuring, expansion, offshoring, mergers, or bankruptcies. This classification provides insights about the nature of shocks impacting the labour market, knowledge that is typically absent from aggregate statistics. Therefore, the ERM serves as a potential conduit for acquiring high-frequency insights into labour trends before official data releases occur.
It is essential to note that the media-reported restructuring announcements primarily focus on larger companies, a bias stemming from both reporting thresholds and the nature of media coverage. Consequently, the ERM may not fully represent overall employment trends, particularly in nations where economic activity is predominantly rooted in smaller enterprises. In the euro area, firms with 250 or more employees comprise less than 1% of all businesses yet employ about 36% of the workforce. Broadening this threshold to businesses with at least 50 employees increases their share to approximately 50%. This means that the ERM captures announcements relevant to firms that account for one-third to one-half of the total workforce, although the real number of workers directly impacted by recorded announcements is notably lower. Moreover, coverage differs between countries, influenced by variations in industrial composition and the distribution of employment across business sizes. Notably, Germany and France collectively represent roughly 40% of all restructuring events announced within the euro area captured by the ERM, while Spain and Italy report fewer events, often correlating with their lower proportions of employment in larger firms. Thus, the ERM provides a lens into the restructuring activities of larger employers, leaving gaps regarding dynamics prevalent within smaller firms, alongside labour force participation rates and hours worked.
Sectoral Insights and Employment Changes
The sectoral breakdown of restructuring events documented in the ERM reveals where significant restructuring efforts are concentrated, enriching the narrative alongside standard aggregate labor market data. Manufacturing emerges as the most intensive sector for restructuring, responsible for 37% of jobs affected by these events, contrasting starkly with the health, social, and administrative services sector, which reflects a much lower share of impacted jobs despite having a larger employment base in substantial firms. Since the ERM focuses on notable restructuring events, it tends to spotlight larger, well-publicized cases, which can lead to misinterpretation of trends in various sectors.
From the differential between jobs created and jobs lost, a net job changes (NJC) indicator is derived, which aligns closely with employment growth trends across the euro area. This indicator is quantified as seasonally adjusted announced job creations minus job losses reported in the ERM. Analysis of data since 2005 indicates around 190 observations per quarter on average, amassing roughly 52,000 announced job losses against 33,000 job gains. Typically, job cuts exceed job additions, even as overall employment figures increase, which reflects the dataset’s structure; substantial job reductions are usually processed as discrete, highly publicized incidents that meet the ERM reporting standards, while hiring trends are often more gradual and less notable.
Employment Growth Predictions and Conclusions
As the NJC indicator is tracked over time, it reveals a consistent pattern with euro area employment growth and serves as a forecaster for potential shifts in the job market. A probit model analysis utilizes the NJC to gauge the probability of year-on-year employment growth falling below its historical average. Incorporating lags of the NJC enables the model to present a timely and supplementary insight into labour market conditions, assisting in forecasting when employment growth might surpass historical averages again.
Recent restructuring reports indicate that employment growth might remain under its historical average through the first half of 2026. Euro area employment has slowed notably since mid-2025, aligning with rising probabilities forecasting below-average growth. Although these predictions display volatility, they highlight the ongoing potential for reduced growth in early 2026, paralleling the actual annual employment growth rate of 0.6%. Country-level analyses identify France and Spain as key contributors to positive net job changes, whereas Germany is witnessing job reductions outpacing additions. Sector-specific evaluations indicate that information technology, public administration, and defense sectors are positively contributing to employment, whereas manufacturing is showing a shift towards negative net employment changes.
References
Key sources for the insights provided include the European Foundation for the Improvement of Living and Working Conditions (Eurofound) for the ERM methodology, publications by the European Commission on labour market and wage developments, and statistical data from Eurostat regarding firm size and employment distributions.
