Unemployment In Europe Its Impact In The

Unemployment In Europe: Its Impact In The Future Of Europe Essay, Research Paper

Unemployment is currently one of the biggest challenges facing the European Union. The fight against

unemployment is an essential question that the European Union has to encounter in the short term. Today.s

unemployment problem represents the most significant worry of the European Union citizen. Unemployment is the

greatest disturbance of the European economy. Approximately 18 million of its people are out of work, an average

unemployment rate of 10.6%. For instance, in France and Spain, the latest rates are 12.6% and 19.9% respectively.

More women are unemployed than men. Youth unemployment is twice as high as the average. Almost 6 million

people have been out of work for more than two years.

Employment initiatives of the EU

Because of the need to pursue solutions to the unemployment alarm, the European Commission called for a special

employment summit of heads of state in late November. The European Commission wants to adopt lots of targets

for the next five years. Under the form of “employment guidelines,” it wants to increase the employment rate from

60% to 65%; create 12 million new jobs; cut the unemployment rate to 7%; raise the proportion of the unemployed

who are offered training from the current EU average of 10% towards the average of the three best-performing

member states -that is, above 25%; and reduce the number of people who drop out of the education system by half

within a period of five years. The commission wants to switch some of the $221 billion spent every year on

unemployment benefits to active labor-market policies;

cutting the overhead and tax costs of employing workers; and encouraging more adaptable forms of contract.

Furthermore, the Commission is calling for a reversal of the long term trend towards higher taxes and charges on

labor, which have increased from 35% in 1985 to more than 42% in 1995. The commission considers the possibility

of increasing the growth of part-time work, which has been responsible for all of Europe.s net job gains in the past

six years and now accounts for 16% of the European Union.s total employment. At the same time, the commission

wants part-timer employees to enjoy the same security and benefits as full-time workers, a sure formula that has

reduced the number of part-time jobs created. Regarding taxation, the commission recommends reducing taxes on

labor, which have risen from an effective rate of 35% in 1981 to 42% today. Yet rather than just cutting the total tax

burden, which Europe badly needs, it suggests offsetting such reductions with higher taxes on energy and capital

that could well raise unemployment.

Germany.s unemployment trend compared to other EU members

In 1989, the then West Germany.s rate of unemployment was only 5.6 per cent. This was fractionally above the 5.2

per cent of the US. It was well below the European Union.s average of 8.7 per cent, the UK.s 7.2 per cent, the

French 9.4 per cent, Italy.s 10.9 per cent and Spain.s 16.9 per cent. In 1996, Germany.s unemployment rate was 9

percent. This was still below Italy.s 12 per cent, France.s 12.4 per cent and Spain.s

22.2 per cent. But it contrasts unfavorably with the 5.4 per cent of the US and even with the 8.2 per cent of the UK.

The German unemployment rate is recently at 11.2 per cent of the labor force. Western Germany jobless rate is

9.5% while in eastern Germany the rate is 18.2 per cent.

Because of the difficulties of German unification, Germany.s job performance seems to be appropriate. However a

justification, although probable, does not change the truth that the country needs more jobs, but has failed to provide

them. Following unification what Germany needed was a surge in labor-absorbing growth. Rather, what has

happened, has been a decline in employment in both eastern and western Germany. Blame for the eastern failure lies

with the decision to translate western labor practices into east Germany. For instance, pressure for wage equalization

has pushed compensation per employee to some 70 per cent of western levels. Given low productivity, unit labor

costs are 30 per cent higher in eastern manufacturing than in the west, making the east the most expensive location

in the world.

Common recommendations

As the German president, Roman Herzog, said at the European Forum in Berlin, Europe has to break out of the cycle

of sluggish economic growth and high unemployment by adopting policies that encourage entrepreneurial and

technological dynamism. that Europe should learn from the US experience of cutting spending and reducing taxes.

He claimed “We are too worry about our stability, and our possessions, than at unleashing economic dynamism.”

Rapid growth in the US, rooted on incentives to develop new technologies, demonstrated the capability for

generating higher growth and employment. Europe must stimulate knowledge-based industries, which requires a

good jump in education and research and deve

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