Career prospects and dynamics play a crucial role in financial planning, as they impact on available incomes and the need for protection. After COVID, big changes are taking place in the European labor market. Let's take a look at them. 

Work is one of the cornerstones that guide most of the important choices everyone must make throughout life. One's educational path, for example, is normally focused on acquiring the skills relevant to a certain type of profession, just as the timing of certain personal choices, such as starting a family or buying a house, is dictated by career developments.

Financial planning and investment choices are also closely linked to work dynamics. Indeed, one's current and future earning capacity depends on work, since pensions are also calculated based on the income received during working years.
A young person who has the prospect of finding employment and access to stable, growing incomes will tend to make different investment choices – probably more oriented towards enhancing the value of assets than safeguarding them – than someone working in an employment market that provides no guarantees of stability.

For this reason, when constructing an investment portfolio, it is also useful to consider the individual's present employment situation and future prospects, bearing in mind that these depend not only on the individual's abilities butalso on the environment in which that individual lives. In a globalized world, this is no longer simply a local or national matter but must extend to at least the European level.

Labor in Europe: the impact of COVID

International mobility, the result of the harmonization policy between European states, has helped to create a labor market that, if it cannot be called European, is nevertheless integrated across different countries of the Old Continent.

The European Commission, which monitors labor mobility between Member States, noted in its latest available report how the number of Europeans who live and work in another European country is steadily increasing: in 2019, 17.9 million Europeans resided in another EU country, 13 million of whom were of working age^[1].

One cannot, of course, overlook the impact of the pandemic, which has affected all countries and Europe as a whole. Before the economic impact of the COVID-19 crisis began to make itself felt, the labor market recovery in Europe was bringing the EU employment rate closer to the 75% target set by the EU2020 strategy.

A very detailed picture of the impact of COVID on the labor market in Europe was provided by Eurofound, European Foundation for the Improvement of Living and Working Conditions, in its publication "Recovery from COVID-19: The changing structure of employment in the EU" ^[2]. According to the analysis, COVID came to an abrupt halt, but the recovery was rapid, helped by policy interventions and public supportat both national and European levels. In particular, employment levels in Europe have returned to pre-crisis levels in two years, compared to almost eight years after the 2008 financial crisis.

However, there were large disparities between sectors. While employment in hotels and restaurants, wholesale and retail trade, and transport recorded a cumulative loss of 1.4 million workers between 2019 and 2021, the information and communication sector added 1 million jobs during the same period.

Although job losses during the pandemic were concentrated in low-paying jobs, the upturn in employment levels in 2021 was driven by growth in well-paid jobs and occupations. Throughout the period 2019-2021, increases in well-paid jobs were greater among women than men in the EU27, while at the same time, job losses were more acute for women in low-paid jobs.

According to Tina Weber, Head of Research at Eurofound, Employment Unit: "There are still six out of ten people who are on open-ended, non-time-limited contracts. Although the figures for "atypical work", i.e. part-time and fixed-term employment, have not really changed in the last five to ten years, they belie a trend towards more precarious forms of work and people with precarious contracts do not have the same access to employment or social protection".

Aging population

The legacy of COVID is thus greater inequalities between well-protected workers and workers with limited access to social protection and employment rights.

This trend dovetails with another macro-trend, which has been ongoing for some time, namely the increasing age of the population. This poses many challenges in relation to employment, working conditions, living standards, and welfare, as it gives rise to concerns about the sustainability of pension systems and labor supply. In 2016^[3], the employment rate of older workers aged 55-64 in the EU stood at 55.3%, compared to 66.6% for those aged 15-64, where the largest increase was among women.

The European statistics^[4] show how demographic dynamics have already significantly altered the European labor market, with a steady growth in the portion of employed persons between 55 and 64 years old(12.5% were in this group in 2009, and 19% will be in 2021) and a decrease in the proportion between 15 and 24 years old (9.2% in 2009, 7.8% in 2021).

In the long run, the trend shows that the 55-64 age group is tending to grow and be less volatile than younger workers, even in the 2020 COVID years.
What will the future look like? In order to maintain the sustainability of the system, flexible forms of retirement are being considered, providing the opportunity for prolonged employment. The risk otherwise is that the burden of welfare spending will put a strain on the welfare system.

In a context of increased precariousness and possible reduced protection from the public system, financial planning is presenting an opportunity to build forms of supplementing labor income and pensions, with solutions that make investment accessible through customization based on income capacity, and that facilitate it even in periods of job insecurity.

^[1] >https://ec.europa.eu/social/main.jsp?langId=en&catId=89&furtherNews=yes&newsId=9877

^[2] Eurofound (2022), Recovery from COVID-19: The changing structure of employment in the EU, Publications Office of the European Union, Luxembourg https://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef22022en.pdf 

^[3] https://www.eurofound.europa.eu/it/topic/ageing-workforce

^[4] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Employment_-_annual_statistics#Impact_of_the_COVID-19_pandemic_and_recovery