Home > Uncategorized > Broad unemployment in Europe: the last two years. Two graphs.

Broad unemployment in Europe: the last two years. Two graphs.

broad 3Eurostat made new data on broad unemployment available. For some countries (Ireland, Greece, Switzerland), these show a less rosy picture than the ‘normal’ unemployment data. Only the Czech Republic has low normal as well as low broad unemployment though Poland, Hungary, Bulgaria (!) and Germany seem to be heading that way. Altogether, labor slack is still immense. At this moment, wage increases are still low in non-Eastern European countries. Considering the slack this might stay so for a while, though there are more opportunities to obtain a better paying job.

In my country, the Netherlands, the labor market shows signs of normalizing. “Help wanted’ signs are becoming are becoming normal (a sign of a normal labor market, NOT of an overheated one) and ‘normal’ unemployment is down and, with 4,4 %, among the lowest rates of Europe.. Germany as well as a number of countries bordering on Germany (Poland, the Czech Republic, Switzerland, Austria) also know relatively low unemployment. But how about ‘broad’ unemployment, i.e. part time workers who want more jobs, people available but not seeking and people seeking but not immediately available?  Graph 1 shows the level of broad unemployment. It shows that broad unemployment in the Netherlands and Switzerland (which also knows pretty low normal unemployment) is quite high. For Italy and Spain broad unemployment data shows that the employment situation is dire and in fact, considering the fact that Greece has relatively low broad unemployment, almost as bad as in Greece. The whole Southern fringe if Europe is an area of lost opportunity. For Poland and the Czech Republic (which knows very low ‘normal’ unemployment) the broad unemployment data corroborate the positive developments of normal unemployment, which has reached the lowest levels since the dissolution of the Soviet Empire.

 

Broad2

Looking at changes a somewhat different picture emerges. Two of the high broad unemployment countries, Italy and the Netherlands, show relatively large declines which underscores the positive development of the labor market (though labor slack is still immense). For Ireland, Switzerland and Greece, the increase in broad unemployment to the contrary shows that the development of normal unemployment is not entirely indicative for developments of the total labor market.

  1. January 20, 2018 at 2:26 pm

    So my question is, what level of appreciation is there—if any—in your country for the simple fact that all unemployment is directly attributable to insufficient spending in the economy?

    If government officials and politicians in the Netherlands are fully aware of this indisputable answer to the problem of unemployment, what explains their reluctance to use the powers of government to increase the nation’s spending on real economic investments, like infrastructure and human capital?

    Is it a concern about how to fund such spending? A desire to avoid debt? Do policy experts view the option of tax increases on the wealthiest of your country’s citizens to fund such spending as a political impossibility? (If so, is it because they generally believe that tax increases on rich people would have a net negative effect on the economy, perhaps for competitive reasons within the EEC?)

    I’m just wondering how similar the political environment is in your country compared to what I see every day in the U.S…

  2. January 21, 2018 at 12:41 am

    It seems to me there is a lot of apples and oranges in this discussion.

    My view of the history is this: politics and economics were entangled in the field call “political economy” until late in the 19th century, when economics became more and more dominated by the math, which made it more and more technocratic and “objective”. Politics didn’t bother with math until nearly a century later, when it became infected with public choice theory, which was based upon math economics market fundamentalism.
    But all economies are systems, created or evolved by people to be run by people to serve people’s material needs. People. Human beings.
    Politics is more than two people working together to accomplish something. Politics is inherent in any honest comprehensive analysis about how to build an economic future that works.

    And, about the technocratic pretense of objectivity:

    “A ‘disinterested’ social science has never existed and, for logical reasons, can never exist… The only way in which we can strive for ‘objectivity’ in theoretical analysis is to expose the valuation to full light, make them conscious, specific, and explicit, and permit them to determine the theoretical research … The stated value premises, together with the data … should then form the premises for all policy conclusions.”
    — Gunnar Myrdahl, Objectivity in Social Research (1969)

    In his classic, An American Dilemma (1944), Myrdahl strongly advises people to put their biases on the table on the outset and not pretend.

    • January 21, 2018 at 5:20 pm

      Geez, I posted this in the wrong discussion. Sorry!

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