Why is there so much unemployment in Europe today?
How can we avoid this in the future?
Unemployment is mainly defined as the state of an individual looking for a paying job but not having one. Though, it does not include full-time students, retired people, children, or those who are not actively looking for a paying job. Especially in Europe, unemployment is a major problem which concerns mostly the European youth. Have you ever wondered when and why did all these start? Have you ever tried to think of ways to improve the situation.
First of all, anybody attempting to explain the evolution of unemployment in Europe over the last 30 years must confront a series of facts. High unemployment is not a European trait. Until the end of the '60s, unemployment was very low in Europe. This continent was believed to be "the miracle of unemployment". The miracle came to an end in the '70s, when unemployment steadily increased and it kept increasing in the '80s. It appeared to decrease in the '90s, but the decline is maybe temporarily on hold. For the European Union as a whole, the current unemployment rate is still very high, approximately 10 percent.
Secondly, the evolution of the average European unemployment rate hides large cross-country differences. In the four large continental countries -- France, Germany, Spain, and Italy -- the unemployment rate has increased steadily and remains very high. In a number of smaller countries, notably Ireland and the Netherlands, unemployment increased until the early '80s, but has steadily decreased since then. In a number of other countries, for instance Sweden and Denmark, unemployment has remained consistently low with the exception of high cyclical unemployment at the start of the '90s.
The initial increase in unemployment in the '70s coincided with a number of adverse shocks. Some of them were worldwide and some specific to Europe. Thus, much of the initial research naturally focused on the role of shocks in explaining the increase in the natural rate of unemployment. In the '70s, raw materials prices rose sharply. More importantly, but less visibly at the time, the high rate of productivity growth that had characterized the post-war period came to an end. To the extent that workers did not fully adjust to these changes, these shocks plausibly could have led to an increase in the cost of labor, and so to the increase in unemployment. In the '80s there was a prolonged period of high real interest rates, and so to a large increase in the user cost of capital. This in turn could have led to low capital accumulation, and by implication, lower employment growth and higher unemployment.
That is why initial explanations focused on shocks. However, an explanation of unemployment based on shocks runs into two main difficulties. First, shocks were largely similar across countries. The decline in productivity growth was largely common to all European countries. The same is true of most other shocks. While the increase in interest rates varied across countries, real interest rates increased in all countries from the early '80s on. Yet, as facts show, the evolutions of unemployment have been very different across countries.
Unemployment, in general, is due to the facts above, including political instability. Therefore we should avoid it in order to eradicate poverty in society. In order to accomplish such an aim, society is suggested to follow several steps. It all begins with education. Governments should improve on levels of education by training job creators instead of job seekers. This way children would distinguish spiritual and intellectual education from the managerial and capitalistic one. With that said, education could also offer on confronting unemployment by promoting sports, music and drama to enable the youth get employed. Because if schools focus on the cognitive sector of it, today's "numb" children will be tomorrow's passive adults, who will in advance create a passive society.
Governments should also handle specific national issues less noticed, though very significant. Issues such as promoting agriculture and farming mainly in rural areas to improve employment opportunities, Promote exports instead of imports in order to increase on national income and promoting industrial development by using land tenure system and tax holidays in order to attract both local and foreign investors. Small details easily forgotten by any capitalist command or just ignored due to low presumable profiting.
The problem of unemployment is becoming more and more acute. The only way to diminish the intensity of unemployment is to encourage the youth towards the welfare of the county. The education system must be reformed up to the level of an underdeveloped country. Agriculturists must be encouraged by the government. We must have a clean and corruption free government. More and more industries must be built to provide much opportunity to the youth. Therefore industrialization must be given top priority. Youths activities and energies should be directed in a useful channel for the nation’s prosperity. Unemployment is an alarming tone for the survival of the country. Solution to this problem is a must to wriggle the new generation out of the sense of deprivation.
Bibliography
a) http://www.ehow.com/how_2161379_avoid-unemployment-society.html
b) http://www.nytimes.com/2013/11/01/business/international/jobless-rate-in-europe-stays-at-record-12-2.html?_r=0
c) http://ideas.repec.org/h/eee/labchp/3-47.html
d) http://www.ifw-kiel.de/wirtschaftspolitik/politikberatung/kiel-policy-brief/KPB_59.pdf
Written by:
Stella Bouriti
18
Greece
How can we avoid this in the future?
Unemployment is mainly defined as the state of an individual looking for a paying job but not having one. Though, it does not include full-time students, retired people, children, or those who are not actively looking for a paying job. Especially in Europe, unemployment is a major problem which concerns mostly the European youth. Have you ever wondered when and why did all these start? Have you ever tried to think of ways to improve the situation.
First of all, anybody attempting to explain the evolution of unemployment in Europe over the last 30 years must confront a series of facts. High unemployment is not a European trait. Until the end of the '60s, unemployment was very low in Europe. This continent was believed to be "the miracle of unemployment". The miracle came to an end in the '70s, when unemployment steadily increased and it kept increasing in the '80s. It appeared to decrease in the '90s, but the decline is maybe temporarily on hold. For the European Union as a whole, the current unemployment rate is still very high, approximately 10 percent.
Secondly, the evolution of the average European unemployment rate hides large cross-country differences. In the four large continental countries -- France, Germany, Spain, and Italy -- the unemployment rate has increased steadily and remains very high. In a number of smaller countries, notably Ireland and the Netherlands, unemployment increased until the early '80s, but has steadily decreased since then. In a number of other countries, for instance Sweden and Denmark, unemployment has remained consistently low with the exception of high cyclical unemployment at the start of the '90s.
The initial increase in unemployment in the '70s coincided with a number of adverse shocks. Some of them were worldwide and some specific to Europe. Thus, much of the initial research naturally focused on the role of shocks in explaining the increase in the natural rate of unemployment. In the '70s, raw materials prices rose sharply. More importantly, but less visibly at the time, the high rate of productivity growth that had characterized the post-war period came to an end. To the extent that workers did not fully adjust to these changes, these shocks plausibly could have led to an increase in the cost of labor, and so to the increase in unemployment. In the '80s there was a prolonged period of high real interest rates, and so to a large increase in the user cost of capital. This in turn could have led to low capital accumulation, and by implication, lower employment growth and higher unemployment.
That is why initial explanations focused on shocks. However, an explanation of unemployment based on shocks runs into two main difficulties. First, shocks were largely similar across countries. The decline in productivity growth was largely common to all European countries. The same is true of most other shocks. While the increase in interest rates varied across countries, real interest rates increased in all countries from the early '80s on. Yet, as facts show, the evolutions of unemployment have been very different across countries.
Unemployment, in general, is due to the facts above, including political instability. Therefore we should avoid it in order to eradicate poverty in society. In order to accomplish such an aim, society is suggested to follow several steps. It all begins with education. Governments should improve on levels of education by training job creators instead of job seekers. This way children would distinguish spiritual and intellectual education from the managerial and capitalistic one. With that said, education could also offer on confronting unemployment by promoting sports, music and drama to enable the youth get employed. Because if schools focus on the cognitive sector of it, today's "numb" children will be tomorrow's passive adults, who will in advance create a passive society.
Governments should also handle specific national issues less noticed, though very significant. Issues such as promoting agriculture and farming mainly in rural areas to improve employment opportunities, Promote exports instead of imports in order to increase on national income and promoting industrial development by using land tenure system and tax holidays in order to attract both local and foreign investors. Small details easily forgotten by any capitalist command or just ignored due to low presumable profiting.
The problem of unemployment is becoming more and more acute. The only way to diminish the intensity of unemployment is to encourage the youth towards the welfare of the county. The education system must be reformed up to the level of an underdeveloped country. Agriculturists must be encouraged by the government. We must have a clean and corruption free government. More and more industries must be built to provide much opportunity to the youth. Therefore industrialization must be given top priority. Youths activities and energies should be directed in a useful channel for the nation’s prosperity. Unemployment is an alarming tone for the survival of the country. Solution to this problem is a must to wriggle the new generation out of the sense of deprivation.
Bibliography
a) http://www.ehow.com/how_2161379_avoid-unemployment-society.html
b) http://www.nytimes.com/2013/11/01/business/international/jobless-rate-in-europe-stays-at-record-12-2.html?_r=0
c) http://ideas.repec.org/h/eee/labchp/3-47.html
d) http://www.ifw-kiel.de/wirtschaftspolitik/politikberatung/kiel-policy-brief/KPB_59.pdf
Written by:
Stella Bouriti
18
Greece