Employment In Europe / Some perspectives

Over the past decades, there used to be that almost axiomatic, empirically derived law in economics that the natural unemployment *** rate in the US was bound to be lower than in most other western countries (notably European ones). I concentrate mainly on the EU in this answer since the other European countries are mostly no valid comparison (too small, too resource/money-rich, too poor). Japan has a completely different system so does not compare well either.

The above picture from Eurostat illustrates the unemployment in the EU as a whole and three large countries for the last three decades. The following table from further aggregates some of these numbers for the three largest economic areas over the last four decades of the 20th century

It also shows that the natural rate of unemployment can change over time. Essentially, it gets interesting from the 80s, when the full employment Europe enjoyed while rebuilding itself from the ashes of WW2 ceased to be. The first thing to take away here: We are not in any really unusual situation concerning unemployment in the current crisis, European unemployment rates have been at very similar levels at various stages over time. People tend to (often deliberately) forget that when they talk about the Euro and the current state of the union. The traditional reasons given for the higher natural rate of unemployment are better social security, stricter labour laws, minimum wages, lower labour mobility, and some others.

The economy clearly isn’t fine. But the sky-rocketing youth unemployment may actually prove to be the more pressing problem in the long run. I do not share the extremely bleak outlook of some of the writers in What are the long-term consequences of near 50% unemployment for young people in Spain, Portugal, Greece, and Italy?, but nobody can in good conscience argue that there is not a large part of a generation that we might lose in some places of Europe….

*** JMM: These rates are more surnatural than natural these days!

Choosen excerpts by JMM from

via Is There Hope For Employment In Europe? – Forbes.