|
|
|
Your Money > Personal Finance Articles > The toughest countries...
|
By Forbes staff
The Euro Zone may be crawling out of recession, but it's still almost impossible in parts of the Continent to find a job. Though in Q3, gross domestic product for the 16 countries using the Euro grew by 0.4% from the second quarter, according to Eurostat, many residents continue to be unable to secure work. Those in countries like Latvia, Spain and Ireland, which once enjoyed construction booms, are now experiencing widespread job losses. In September, Latvia reported the highest unemployment rate in Europe, a whopping 19.7%. It's followed by Spain at 19.3%, according to Eurostat.
> See the full list of Europe's best and worst unemployment rates The picture is even more grim for young workers. The jobless rate for those under 25 is 41.7% in Spain and 33.6% in Latvia. Job hunters might have more success in Norway; at 3.2%, its unemployment rate is Europe's lowest. Switzerland follows at 4.2%, according to the Organization for Economic Cooperation and Development, which gives data for countries that are outside the European Union and not covered by Eurostat.
What's Behind the Numbers The stark differences in regional unemployment are partly a result of the various sectors that drive each country's economies. Spain, like Ireland and Latvia, has been hit hard by unemployment because of the collapse of the construction sector, which has yet to see any clear signs of recovery. Construction, a labour-intensive pursuit, also tends to employ temporary workers; they are less expensive to hire and easier to fire. In Spain last year, about a third of those employed were classified as temporary and around 90% of all job losses in Spain in the last year have been of temporary workers, according to Stefano Scarpetta, head of the OECD's employment analysis and policy division. In Germany, where half the gross domestic product comes from exporting companies such as Siemens, chemical makers like BASF or carmakers like Volkswagen and Porsche, hard-to-find skilled workers with training and certain qualifications are valued over temporary staff. As a result, “many Germany firms want to hoard their labour,” says Scarpetta. “So rather than dismiss them, there is more of a possibility to adjust things like cutting workers' hours.” What's more, Germany's many large blue-chip companies not only have the scale to help them avoid job cuts, they have also been helped by the German government's recent short-term working scheme, in which the state subsidizes worker wages to help firms avoid layoffs.Such policies have helped keep the country's unemployment rate (7.6%) under the European Union average (9.2% in September), even in the depths of the recession. Things may even be looking up: New government data on Monday showed a larger than expected jump in German exports last month, lending support to the notion that a recovery in world trade is already helping revive the country's economy and labour force. If the troubled labour markets of Latvia, Spain and Ireland want to see their economies recover, they should look to Norway for guidance, suggests Scarpetta. It has one of the most generous unemployment benefit systems in Europe, with unemployment benefits representing, on average, 33.6% of a person's previous earnings in 2007, compared with 13.6% in the U.S. and 12.1% in the U.K. The country's robust benefits are the result of high income taxes and VAT. But perhaps more important than scale is how Norway uses its state funds to help the unemployed back into work. The country has an expensive yet effective “active labour market” program, says Scarpetta, where the unemployed are helped back into jobs through training, assistance with job searches and even subsidized employment. Countries like the U.K., Ireland and Spain tend to have a more “passive” benefit system in which the unemployed are entitled to certain amount of welfare benefits, but little else in the way of assistance in finding work; in European countries where the unemployment is highest, state funding per unemployed person has also fallen. Scarpetta argues that it should be the other way around, and that the safety net of benefits alone can actually lead to long-term unemployment. “With previous recessions, we've noticed a tendency in Europe for unemployment to stay at a high level after increasing,” said Scarpetta. “There's a risk that unemployed people become discouraged, lose contact with the labour market, and so it's hard to get them back into employment.” More state spending on the unemployed is a bitter pill for governments in Spain and Ireland to swallow, especially when their state deficits are running so high. But it might be a worthwhile investment. “It's very important to help the most employable individuals back into jobs by providing job search assistance. Then to focus limited resources on those for whom it's going to be difficult to regain employment by themselves.” For Spain and its more than 4 million unemployed, that might be a Herculean task. More from Forbes.com
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||