Introduction. Unemployment is again on a rise and it has reached unprecedented levels in the euro zone, with long term unemployment reaching alarming peaksUnemployment is again on a rise and it has reached unprecedented levels in the euro zone, with long term unemployment reaching alarming peaks, especially in Member States under strong fiscal consolidation. More than one out of five young people in the labor market is unemployed and there is a risk of the emerging of a lost generation. The disparity in unemployment rates between Member States has dramatically grown and reflects the effects of asymmetric shocks and the unequal labor markets resilience towards crisis. Wages and labor costs have started to adjust but the effects of the reforms are not fully evident yet. Signs of deterioration in the job matching process in the European labor markets are supported by the numerous facts and there is a risk that the increasing structural unemployment will become entrenched. Average household incomes are declining in many Member States and recent data indicates a trend to higher levels and deeper forms of poverty and social exclusion with in-work poverty and social polarization on the rise in many Member States. The effects of social protection as an automatic stabilizer have been weakening since 2010 and have resulted in higher poverty rates. There are significant differences among Member States in the efficiency of their spending when it comes to poverty reduction. The employment and labor market situation in Europe, and in particular, in some Member States, calls for more determined action by the public authorities and the social partners. Ambitious reforms are being implemented but further efforts are necessary to modernize the labor markets and invest in human capital to create the conditions for a job-rich recovery.
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