Tuesday, 30 April 2013

Unemployment - the only sector in the eurozone and the EU with strong growth

These people are the ones who should be held accountable for the record unemployment and recession  in the EU.
"Our economic fundamentals remain strong"
EU Commission president J.M. Barroso (speech in New York, April 12 2013)

The only thing that is growing fast in the eurozone (and basically in the entire EU) is unemployment. Today official eurozone enemployment hit a new high: 12,1% - 19.2 million people - are on the dole. In the full 27-member EU, a total of 26.5 million (10.9%) people were out of work in March.

The Eurostat data show a dramatic year-on-year rise; a year before the eurozone unemployment was 11% and 10.3% for the entire EU. 

Greece (27.2%) and Spain (26.7 %) were the hardest hit. 

You could be forgiven for thinking that it could not possibly be much worse. But, as economist Andrew Watt (Germany's Macroeconomic Policy Institute), shows us, you would be wrong: 
"we can make a rough and ready calculation of the “real” rate of underemployment in Europe. According to the European Labour Force Survey, average hours of part-timers are a tick under twenty per week, whereas full-timers work 41.5 hours a week. We don’t know exactly how the working time preferences are distributed, but a reasonable starting point would seem to be to assume that those part-timers wanting longer hours have the same average hours as all part-timers and that they want to move to the average of full-timers. In  other words we add somewhat more than half of the 9.2 million involuntarily part-time workers to the unemployed total.** We then add the people in the two sub-groups of the economically inactive both to the numerator (unemployed) and denominator (unemployed plus employed).
If I haven’t made any stupid excel mistakes*** the underemployment rate in the EU27 could be considered to be up to 16.7% and in the euro area as high as 18.0%. In other words the unemployment rate captures only about two-thirds of the extent of European underemployment."

It is of course possible that I have misunderstood what Barroso said. He may actually be right when he states that "our economic fundamentals remain strong" - if he meant to say that his own and the other commissioners' economic fundamentals remain strong. 

No comments: