Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
The pressure on the labour market has eased after a job-intensive expansion
Employment has increased significantly in Denmark, the euro area and the US during the post-pandemic expansion, with stronger growth relative to GDP than in previous expansions. The high job intensity of the recent expansion in the Danish economy has several causes, including sectoral shifts, hiring of less productive labour and increased use of labour in production. This development has been supported by the fact that demand has risen sharply, supply has increased, and wages have risen more slowly than product and input prices during the period. However, the pressure on the Danish labour market has eased over the past two years.
Key messages
Why is it important?
The labour market is of vital importance to society and for economic development. Understanding movements in the labour market is therefore crucial for understanding the development of the Danish economy. This analysis contributes to Danmarks Nationalbank’s ongoing assessment of the economy and helps lay the foundation for its recommendations for economic policy.
″The labour market has so far remained resilient despite the slowing economy″
Christine Lagarde, President of the ECB
Main chart
The expansion has been more job-intensive than previously
Note:
The chart shows the relationship between employment growth and real GDP-growth. The periods are defined as: Expansion in the 2000s (2002Q3 – 2007Q4), Financial crisis (2007Q4 – 2009Q2), Expansion after the financial crisis (2009Q2 – 2019Q4), Corona pandemic (2019Q4 – 2021Q2), Since 2019 (2019Q4 – 2023Q4) and Expansion after Corona (2021Q2 – 2023Q4).
Source:
Macrobond and own calculations based on the methodology in “The employment-GDP relationship since the crisis”, ECB Economic Bulletin, issue 6, 2016.