Appalling overall unemployment in Eurozone at 20.6%

László Andor, Member of the EC in charge of Employment, Social Affairs and Inclusion, gave a press conference following the publication of the EC report on industrial relations. According to the report, the ongoing economic crisis poses a serious challenge to the dialogue between workers’ and employers’ representatives. The report shows that recent government reforms have not always been accompanied by fully effective social dialogue, leading to increasingly conflictual industrial relations in Europe. (EC Audiovisual Services, 11/04/2013).

As it turns out real total unemployment exceeds by far the already dreadful percentages estimated by the national statistical services of the EU countries. According to a press release issued by Eurostat, the EU statistical service, in the EU of 27 member states apart from the tens of millions of the “normal” unemployed, there is another 43 million people working part-time. Out of them in “2012, 9.2 million (6.2 million in Eurozone) wished to work more hours, were available to do so and can therefore be considered to be underemployed. Since the start of the economic crisis the proportion of part-time workers wishing to work more hours and available to do so, has grown steadily from 18.5% in 2008 to 20.5% in 2011 and 21.4% in 2012”. Mind you those are percentages of part-time workers wishing to work full-time.

The same source reveals that in 2012 the number of people working part-time and wishing to work more but couldn’t find a full-time job was 4.4% of total employment. Unfortunately Eurostat doesn’t tell us what percentage of the total labour force this group of people is. Obviously it will be a bit less than 4.4%. It’s possible however to estimate that.

We know that in 2012 the group of people working part-time but wishing to work more numbered 6.2 million persons in Eurozone. Doing some simple arithmetic calculation one can arrive at the estimate that at that time Eurozone’s labour force was anything around 158 million people. Obviously those 6.2 million persons who wish to work more but can’t find an appropriate job are almost 4% of the total labour force.

Want to work more

Now, the European Sting published an article last week under the title “More unemployment and lower wages to make European workers competitive?” It reported Eurostat’s estimate for February 2013, that in the 17 Eurozone countries 19.071 million people were without a job altogether. That was a round 12% of the labour force. However in order to arrive at an overall unemployment plus underemployment percentage one honest statistician has to add the people who wish to work more, but don’t find a full-time job. That gives us an over-all estimate of unemployment in Eurozone of the order of 16%.

What about the countries with problems? Not to forget that the highest unemployment rates are being recorded in Greece (26.4 % in December 2012), Spain (26.3%) and Portugal (17.5%). Now, Eurostat tells us that “In 2012, the largest proportions of people wishing to work more hours and available to do so among part-time workers were found in … Greece (66%), Spain (55%), Latvia (53%) and Cyprus (50%). On the other hand, the smallest proportion was found in the Netherlands (3%), where part-time working is the most common, followed by Estonia (8%) and the Czech Republic (10%).

Permanently lost

Eurostat takes its present research a step forward by trying to estimate the number of people available to work but belonging to the group of the economically inactive population (those persons neither employed nor unemployed). According to the same source there were 8.8 million persons aged 15 to 74, but not seeking and 2.3 million seeking work, but not available in the EU27 in 2012”. Despite not participating in the economically active population, those persons have a strong attachment to the labour market. Together these two groups constitute a potential additional labour force of 11 million people. In the EU27 these two groups were equivalent to 4.6% of the labour force, a percentage varying between Member States, from 1.5% in the Czech Republic to 12.1% in Italy.

Obviously there exist more people who wish to work but don’t find a job. In reality they must be added to the overall unemployment rate, because all those more millions would take up productive employment, if the labour mark gave them a chance. In short the overall unemployment rate is 16% + 4.6% = 20.6%. Then one can imagine what really happens in Greece and Spain where the standard unemployment rate is 27% (Eurozone average 12%). Reality there must be real truly appalling. Large parts of the younger and the older being unemployed for more than a year, must be counted as permanently lost from labour market. This will be an insurmountable impediment to growth, if and when the good times come again.