Jobless Growth: The New Paradox of Economic Expansion and Unemployment

When labor market velocity plummets compared to recent years, a new imbalance between growth and employment emerges. In the first quarter of 2024, the unemployment rate was measured at 4.2%, yet labor supply growth slowed to 3.1%, potentially leading to 2.3 million new jobless cases in the Southeast Europe region.

The New Rule of Jobless Growth

■Labor Supply Slowdown: From 5.6% in 2023 to 3.1% in 2024.

■Unemployment Rate: 4.2%, with a risk of rising to 4.8%.

■Growth Speed: 2.7%, but employment growth fell to 1.1%.

■Labor Force Participation: Dropped from 62.5% to 60.2%.

Policy Tug‑of‑War: Growth or Workers?

Economists emphasize the importance of boosting labor participation for sustainable growth. Yet, employers shy away from hiring due to low wages and high tax burdens. OECD forecasts that the unemployment rate could reach 5.5% in 2025.

Investor Hotspots

■Technology: Automation and AI integration drive 12.3% growth for companies like Tesla and Microsoft.

■Healthcare: Rising labor costs could challenge Pfizer’s 8.7% growth target.

■Energy: Renewable investments might reduce unemployment by 1.4%.

Forward Projections: 2026 and Beyond

■Labor Supply: Expected to fall to 2.8%.

■Unemployment Rate: Could reach 5.2%.

■Growth: 1.9%, with employment growth at 0.5%.

■Policy Interventions: The government plans to increase unemployment insurance by 20% under the 2025 Investment Plan.

Economies must view the slowdown in labor market velocity as an opportunity for structural transformation rather than a threat. Revitalizing employment requires investment in new skill sets and balancing automation with human labor.