The paradox of the European labor market

 Experts  note a renewed shortage of workers, yet simultaneously, there are unemployed individuals available in the labor market. This disconnect between the demand for workers and the available labor supply has persisted for decades, as have stories regarding unpaid labor—both foreign and domestic.

Labor market data—including official figures—tell a clear story. Recent data indicate an unemployment rate of 6% across the European Union (EU). Within the Eurozone, the rate is even higher, ranging between 6.2% and 6.4%. Spain reportedly has an unemployment rate exceeding 10%, followed by Finland, Sweden, and Greece, all with rates below 10%. In fact, there is no EU country entirely free of unemployment; the lowest rates (below 4%) are recorded in the Czech Republic, Malta, Slovenia, Poland, Bulgaria, and Germany. The European labor market—which facilitates labor mobility, including through the EURES network—is certainly facing challenges.

Typically, the problem of so-called "shortage occupations" is addressed by importing labor from non-EU countries. According to data from Eurostat, approximately 44.7 million foreigners (foreign nationals) live in the EU; this figure comprises 30.6 million citizens of non-EU countries and 14.1 million citizens living in an EU country other than their own. These individuals represent a significant and growing share of the total European labor market—which comprises approximately 198 million employed persons—and are part of a landscape shaped by massive labor migration flows that show no signs of abating, yet fail to resolve workforce-related challenges.

Slovenia is no exception to this trend, with a particularly strong link to the region of the former Yugoslavia. Data from the Statistical Office of the Republic of Slovenia and the Employment Service indicate that the share of foreign nationals among all employed residents ranges from approximately 14% to 15.8%. The composition of the foreign workforce in Slovenia is distinctive: as many as 87% of these workers come from third countries (primarily from the former Yugoslavia, specifically Bosnia and Herzegovina and Kosovo), while only 13% originate from other EU member states.

These figures suggest that EU member states are not effectively addressing labor shortages in specific professions from within the Union—an approach that would otherwise help reduce unemployment across the EU as a whole.

Indeed, certain economic sectors face persistent labor shortages. This issue cannot be resolved simply through targeted scholarship programs or by increasing the number of available places in relevant educational institutions. However, I hope the stories about local unemployed workers in these sectors—which are supposedly facing a constant labor shortage—are not merely fabrications intended to justify hiring foreigners for lower-paid jobs with poorer working conditions.

Tourism and hospitality (Accommodation and food services): At the EU level, foreigners account for as much as 16% of the total workforce in tourism. The accommodation sector (hotels) stands out in particular, with one in six employees (18%) being a foreigner. In countries such as Luxembourg (64%) and Malta (55%), foreigners make up the majority of the tourism workforce.

High-skilled sectors (ICT, healthcare, science): Data on migration and the EU labor market indicate that between 2019 and 2026, the strongest growth in the employment of foreigners (from both within and outside the EU) is occurring in sectors such as health and social work, information and communication (ICT), and professional, scientific, and technical activities.

Trade and services: Wholesale and retail trade, as well as administrative services, employ a large share of third-country nationals, often in jobs requiring low to medium skill levels.

More than 25% of construction workers in the EU are foreigners. Recently, however, this sector has seen a slight decrease in the percentage of foreign labor employed.

 Of course, the paradox of hiring foreign workers over domestic ones—or at least over those from within the EU’s common labor market—is partly explained by the lower earnings of foreign workers. Foreign workers represent a cheaper labor force and are also more frequently subjected to violations of labor rights. The average wage gap between foreign and domestic workers in the European Union is approximately 8.6% to 9% in favor of domestic workers. However, this disparity varies dramatically across individual EU member states. In Western and Southern EU countries, the gap is significantly wider than in Slovenia or Eastern Europe, as Western nations attract vast numbers of workers from non-EU countries for lower-paid jobs in the service and agricultural sectors. Cyprus (up to ~42%), Italy (~25–30%), Greece (~21%), Spain (~10.5%—though some data suggest up to 29%), and Germany (~19.6% lower) are among the countries with the largest wage disparities between domestic and foreign workers. In fact, no EU member state pays its foreign and domestic workforces equally.

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