The Evolution of Unemployment in Europe - Causes and Consequences - Essay Example

The Evolution of Unemployment in Europe Introduction Ideally, unemployment has never been a trait associated with Europe, but rather it tends to be an aspect that is visible in developing continents. However, this fact has changed over a period of thirty years because the rates of unemployment in the sixties were relatively low, making the talk to be that Europe had experienced the unemployment miracle as compared to any other region in the world. The unemployment levels began to rise in the 1970s and gained momentum in the 80s, but the rates registered a decline in the 90s and later increased to the current rates that are alarmingly high (Blanchard 2004). As at 2004, the unemployment rate stood at 8% within the European Union, which was low as compared to the rates in USA. On the contrary, the unemployment rates tend to vary across countries in that the large countries in the continent, such as Italy, Germany, France and Spain have continued to register high rates. Small countries such as Norway, Sweden and Denmark have maintained their unemployment levels to be low, ranging from 3-8% as their rates keep going down with every passing day (Domenico & Spattini 4). As for Belgium, its unemployment rate has remained unchanged, meaning that it has maintained the high mark without making any increase or decline. Contrary to other European regions, the unemployment rates in Eastern Europe have decreased significantly over the years. Causes of the evolution of unemployment in Europe Research has shown the rate unemployment is particularly high among the youth and most of them might stay in this state for almost a year in many countries that have witnessed fluctuating levels of this situation. Many have argued that one of the reasons as to why these rates are high is because of welfare policies and the lack of government policies that can help minimize this problem. For many of the countries that have registered high rates, this has formed an election platform and also formed significant debates for policy development. The problem also revolves around social welfare as this has contributed to the decrease in productivity for the population because of the incentives provided that makes people not to search for employment. Further, the strict laws regulating job security have also influenced enterprises to reduce the percentage in which they hire people and opting to use machines as a way of increasing their work efficiencies. The result of this has been that most of the working population has fallen victim to the job losses because the machines have replaced most of the human working capital hence influencing the unemployment rates in Europe. In most countries, these applications to the labour market are as a result of enacting policies that have a direct correlation with the fluctuating rates of unemployment and not allowing room for doing much to curb this societal issue. The rates also tend to double during economic recessions in most European countries, making the average rate to double during this time. As for the low productivity workers in the same region, opportunities for them to work have been denied to them because of the minimum wage that present in Europe and their lack of professional back-up. The young workers also feel vulnerable to job loss in Europe because of the cost of job turnover and even because of their high reproductive levels hence increasing the percentage of those going on maternity leave. The implication of this is that the young will fall victim to job cuts because of their likelihood to disrupt the flow of employment because of them having to apply for maternity leave hence reducing the numbers of those that have to complete work tasks. The other cause of unemployment is that stringent laws governing labour in Europe have made employers to take caution when hiring people to work for them, meaning that they opt not to higher rather than having to lay them off in an attempt to decrease their operational costs. For a country like Spain, early school leaving is one of the causes of the increased levels of unemployment in the country as this makes the youth not to be eligible to join the competitive labour market because of their lack of training in any relevant field (Vaughan-Whitehead 399). Most of those that leave school tend to be between 18-24 years and most of them tend to not to participate any skilled training making them unqualified to join the labour market. Ideally, quitting the education system without having completed secondary education makes it hard for the youth to experience a smooth transition into the labour market because they would not have any professional qualifications for the available jobs. Therefore, the lack of professional or skilled knowledge has contributed to increased unemployment, especially in Spain making the youth to make their participation in the labour market to be in vain. Over the years, most young people have come to realize the importance of completing high school education and have enrolled in university in order for them to be able to participate in the job market that has become competitive. However, the access to university education has contributed to unemployment because supply has exceeded demand, making the lives of the unemployed graduates to be high in this European nation as compared to others. The implication of this is that over qualification has created a loophole in the education premium rates, meaning that the graduates have had to receive pay that does not equate to their professional qualifications. Further, the graduates working in jobs that require minimum qualifications in Spain has also increased because many of them prefer to work in the poor paying jobs rather than being part of the unemployed population. Additionally, financial liberalization that allows for the free flow of capital in between countries has been a chief cause for unemployment rates as this has weakened the interest rates and the stock market (Rueschemeyer & Glatzer 71). This means that investors are able to inject or pull out their investments at any time without having to consult anyone over the issue, meaning that the employees that worked for them become jobless in the process of making these decisions. The trade unions aspect has also influenced investors to refrain from pumping capital in these nations because of their push for higher wages. Essentially, this has the potential of increasing the operating costs for investors, hence influencing them to withhold their investments rather having to deal with the powerful trade unions that exist in Europe (Rose 158). Subsequently, all these causes have had an influence on the evolution of the unemployment rates in Europe as most of these cases have made the labour market to be impermeable to the disadvantage of the young population. Consequences of the evolution of unemployment rates in Europe The evolution of the unemployment rates in Europe influenced a number of effects or shocks that were felt within the region or across the globe. For one, this predicament influenced an increase in the prices of raw materials, especially in the 1970s, which translated to an increase in the operations costs during the production stages of commodities in this region. The labour costs also went up because in which only those that had the required professional qualifications could have survived this turn of events. On the contrary, the evolution of unemployment rates in Europe also fostered low capital accumulation meaning that was a decrease in employment growth that affected the latter. Ideally, the consequences were relatively similar across most countries in Europe in terms of a decrease in productivity levels across their industries because the human capital that was powering productivity was no more. As much as the evolution trends across Europe were different in terms of unemployment rates, the consequences were almost similar across the same because they shared the impact. The implication of this was that the productivity growth remained low with the rates of unemployment retaining its high trend, meaning that the consequences have progressed to date. The other consequence is that most of those that either lost their employment or under the unemployed category have been plunged into poverty, they are unable to cope with their changes in lifestyle. In Denmark and in other small nations, the consequences of unemployment are relatively low because of their functioning and regulation of the labour market by making it more inclusive. The consequences would not be dire if these nations focussed on developing active labour market policies (Vranken 94). Unemployment rates also influenced marginalisation of those without employment in terms of social welfare aspects and inclusion. The other consequence that resulted from the evolution of this societal challenge was that there was the negligence of children by their parents because they could no longer provide for their young ones. Those that fell victims to losing their jobs also did not develop an interest in continuing to search for employment because the trend was this situation was not getting any better. Further, the labour market had to make changes in order the population to benefit from them in that they started to include labour based on contracts rather than they offering permanent employment opportunities, which was no longer possible to many. This meant that there was an increase in the short term and informal employment as a way of integrating the unemployed youth population. Other than this, the contractual forms of employment meant that people could no longer develop their careers because there was no job security and the labour market did not provide career enhancement structures (Westerveld & Sol 338). Additionally, the evolution of unemployment also created rifts in families as the breadwinners could no longer provide because they became not dependable financially. Women became depressed as a result of this trend because this meant that they had to work double in order for them to make ends meet as much as the wage was not sustained. Youths became financially vulnerable except for those that had support from their parents in countries such as Spain and Italy, where their labour markets tend to be rigid because the only source of support for such youths was their parents. As compared to Denmark, where there is a flexible labour that allows youths to successfully re-integrate to job placements, countries that have high rates of unemployment had no state support for their transition. The evolution also influenced natural unemployment because there was a high supply of labour, but a low demand for the same. Those that were in the social welfare plans did not develop any interest in joining the competitive labour market making them lazy to searching for employment because their needs were catered for through state means. On the other hand, investors opted to invest in Asian countries whose labour markets were less competitive and demanding as compared to the European labour markets that had become unbearable. The implication of this was that the strong labour unions forced investors to abscond from creating employment opportunities in this region, hence making the Asian economies to be one of the beneficiaries of the unemployment trend in Europe. The non-adaptive ways in which the European population had adopted influenced an increase in the inflation rate because there was an increase in spending without having a steady source of income. Further, a majority of those affected by unemployment at an early age, especially Spain were likely to experience this trend at a later stage in their lives as compared to those that do not experience this at the same age. The consequence of this is that they are likely to receive low pay, over their working lives because the foundation set was poor because most of them will not seek to have the relevant skills to compete in the labour market. Studies have also shown that those that graduate in France have a high likelihood of joining the unemployed population because of recession making them to be unlucky, but later join up with the lucky ones after three years. The economy also feels the crunch of unemployment because a significant part of it may not be contributing towards making it better or its recovery. The drop in bank lending as a result of the recession meant that investors could borrow in order for them to expand their enterprises in order for them to provide more employment opportunities. Solutions to the evolution of unemployment rates in Europe As much as the unemployment rates due to its evolution have been on a soaring trend, some inclusive measures applied across states have been essential in handling this societal issue across European countries. The most significant measure has been the one of including the youths in the labour market, which has been successful in Spain and France because they form a principal part of the working population. Ideally, unemployment in youths tends to have a significant effect on the economy because this influences the productivity levels to go down because of the difficulty attached to finding a job. The Not In Employment, Education or Training program has also been successful in ensuring that young people complete their education in readiness for opportunities that may present themselves in the job market (Europa 2013). The relevance of this is that it prepares youths for their transition to adulthood as they are able to sustain themselves without experiencing many inadequacies. Many nations have advocated for youths to engage in self-employment rather than relying on the employment rates to improve as this will enable them to have a sustainable plan for themselves and their families. Governments should also ensure that they develop policies that are less likely to influence unemployment and ones aimed at creating employment opportunities without marginalizing any fraction of the population. They should also make their countries to have more friendly environments that will be able to attract investments rather than having trade unions that dictate the wage margins making them exorbitant. The inclusion of non-formal and vocational training can also be helpful in curbing this trend as this provides the population with alternative options in case formal education fails to help individuals to secure employment. Greece is one of the European nations that successfully implemented this strategy for both those in school and those out of school as a way of dealing with the unstable unemployment rates (Helen 104). Within the Nordic regions, different strategies are applicable in dealing with this trend that are either structural or long term. For instance, the unemployed population in Denmark has to report to the job centre about their situation within 30 days of their unemployment period (Sonnet 121). This helps in reducing the percentage of those that have no employment for a prolonged period of time alongside the young population being part of a premature pension scheme. The combination of education and work experience can also help curb the further evolution of the unemployment rates in Europe, which is a shift from the conventional sole-dependence on education as a way out of unemployment. In so doing, European nations will be able to contain the evolution of this societal problem because to unsustainable levels as much as the levels of unemployment tend to differ across these nations. Works Cited Blanchard, Olivier J. “Explaining Unemployment in Europe,” 2004.The National Bureau of Economics Research. Web 26 April 2014. Domenico, Germana , and Silvia Spattini. New European Approaches to Long-Term Unemployment: What Role for Public Employment Services and What Market for Private Stakeholders. Alphen aan den Rijn: Kluwer Law International, 2008. Print. Vranken, Jan, Jan Vranken, Marc Jans, and P . Hallen. Labour Market Research and Policy Making in Flanders: Conference Book. Leuven: Steunpunt Werkgelegenheid, Arbeid en Vorming, 2005. Print. Vaughan-Whitehead, Daniel. Work Inequalities in the Crisis: Evidence from Europe. Cheltenham: Edward Elgar Publishing, 2011. Print. European Commission, “EU measures to tackle youth employment.” Europa Press Releases, 8 November 2013. Web. 26 April 2014. Helen, Collins. European Vocational Educational Systems. London: Routledge, 2014. Print. Sol, Els & Westerveld, Maria. Contractualism in Employment Services: A New Form of Welfare State Governance. The Hague: Kluwer Law Internat, 2005. Print. Sonnet, Anne. France. Paris, France: Organisation for Economic Co-operation and Development, 2010. Print. Rueschemeyer, Dietrich & Glatzer, Miguel. Globalization and the future of welfare state. Pittsburg: University of Pittsburg Press, 2004. Print. Rose, Ed. Employment Relations. Harlow, England: Prentice Hall/Financial Times, 2008. Print. Read More