By Valentina Consiglio and Gavin Jones
ROME (Reuters) - Italy's labour market was hit harder than those of most of its European Union peers during the COVID-19 crisis of 2020 and 2021, widening the employment gap compared with the EU average, national statistics bureau ISTAT said on Friday.
In 2020, the year the pandemic struck, Italy lost around 724,000 jobs, the vast majority among temporary workers and the self-employed, with just 90,000 being shed among people with permanent contracts, ISTAT said in its annual report.
That marked a decline in employment of around 3%, roughly in line with Spain and Ireland. The only EU countries to register a larger drop were Greece (-5.1%) and Bulgaria (-3.6%).
When EU economies rebounded in 2021, employment in Italy grew just 0.6%, a third of the increase in the EU as a whole, ISTAT said.
Italy's employment rate at the end of 2021 stood at 58.2%, 10.2 points below the EU average, with the gap widening from 9.1 points in 2019.
By May the rate had climbed to 59.8% according to ISTAT, and the number of people in work was almost as many as before the pandemic.
Italy's long-running demographic crisis also worsened during the COVID pandemic and, unlike in France and Germany, shows no sign of improvement, ISTAT said.
Preliminary data for March showed births down a record 11.9% compared with the same period of 2021, according to the report.
Italian gross domestic product returned roughly to its pre-pandemic level at the end of the first quarter of this year, ISTAT said, following a 9.0% decline in 2020 and a 6.6% rebound last year.
Despite last year's rebound, the number of people living in what ISTAT terms "absolute poverty", meaning they cannot afford essential goods and services, stood at 5.5 million, or 9.4% of the population, tripling since 2005.
(editing by John Stonestreet)