Strong job creation and strong productivity gains: We cannot have both

If the employment rate continues to rise rapidly in the euro zone, this means that the employment rate for young people and for those aged over 60 will rise. On average, unemployed young people and older people have lower productivity than the rest of the labour force. This means that the euro zone cannot expect to enjoy a continued rise in the employment rate and an upturn in productivity. Forecasts that assume that both the employment rate will continue to rise and productivity will recover are therefore over-optimistic. It is naturally positive that the employment rate continues to rise: this reduces the number of people excluded from the labour market. Moreover, the resulting slowdown in productivity does not mean that the productivity of all employees is slowing down; it means that people whose personal productivity is low are finding work.