by On his insightful ‘conversable economist’ blog the excellent Timothy Taylor has a good piece about European unemployment which as follows: American readers: can you imagine the social turmoil in the US if the unemployment rate has been above 10% for the last seven years, instead of peaking at 10% back in October 2009 and falling down to about 5% by a year ago in fall 2015? Can you imagine if half of these unemployed had been looking for work for more than a year? Consider the difference, and you’ll have a better sense of why the EU is struggling to have much appeal to the European public. And this is without regard for Balkan countries like Albania which are not (yet) a member of the EU and which have rates which sometimes are as high as 30%. Taylor is totally right to imply that, despite the decline of the last two years, Euro Area unemployment is, with 10%, still extremely high while long-term and Southern European unemployment are not a reason for concern but a reason for alarm. I do have something to add, however.
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On his insightful ‘conversable economist’ blog the excellent Timothy Taylor has a good piece about European unemployment which as follows:
American readers: can you imagine the social turmoil in the US if the unemployment rate has been above 10% for the last seven years, instead of peaking at 10% back in October 2009 and falling down to about 5% by a year ago in fall 2015? Can you imagine if half of these unemployed had been looking for work for more than a year? Consider the difference, and you’ll have a better sense of why the EU is struggling to have much appeal to the European public.
And this is without regard for Balkan countries like Albania which are not (yet) a member of the EU and which have rates which sometimes are as high as 30%. Taylor is totally right to imply that, despite the decline of the last two years, Euro Area unemployment is, with 10%, still extremely high while long-term and Southern European unemployment are not a reason for concern but a reason for alarm.
I do have something to add, however. As should be known, participation rates (people who has or want a job, as a % of te population) have declined in the USA, unlike the situation in the EU were rising participation rates of people over 55, Southern European women and in fact all East Europeans caused the participation rate to increase which means that differences in the development of employment were less large than differences in the development of unemployment (graph 1, OECD data). The USA also shows a marked long-term decline of the employment rate. Does, against that background, the election of somebody like Trump really come as a surprise? The decline was taken serious – but not serious enough.
There are however quite some differences between European countries. Graph 2 (Eurostat data) does not show data on employment but on participation and shows the change in participation rates in EU countries as well as Iceland and Turkey after 2008. Iceland (non-EU) is included because it has the highest participation rate of the entire sample – and still shows a considerable increase. Turkey is included because it knows a fast increase of the labor force – which does not exclude a rise in the participation rate (mainly: women) in combination with a stable (though high) rate of unemployment.
As one can see most countries knew rising participation rates, despite the Great Financial Crisis and (after 2010) despite pro-cyclical fiscal and, for a time, monetary policies. Most, but not all. Especially countries which were and are lauded for their flexible labor markets actually saw declines. Just like the USA. Remarkable are the considerable increases in the transition countries. Getting unemployment down in combination with giving chances to these (net) new entrants on the labor market does not require insecurity, creditor oriented policies, clueless governments and austerity but jobs and households which do not save for their pensions but which date to invest in their future. Let’s give Europe, and not the authoritarians, a chance. Starting with taking the unemployment statistics more serious.