The Europeans with a job diminish dangerously

Last Saturday 15 June the President of the European Commission Manuel Barroso was in Rome and met with the Italian Prime Minister Enrico Letta. In a Press conference after the meeting the EU dignitary, probably for the 100th time, spoke about “the drama of the high level of youth unemployment in many parts of Europe”. And probably, also for the 100th time, he recited what the Commission is doing, to fight this problem with the “youth guarantee” and the loans to SMEs from the European Investment Bank. Unfortunately for him, both those policy tools are of very limited scope in view of the huge dimensions of the problems supposed to address. Despite the fact that Barroso had a lot to say about unemployment, he didn’t say a word about the fast diminishing numbers of those with a job in Eurozone and the entire European Union. No doubt he must have been informed that the previous day Eurostat, the EU’ statistical service, had released more deplorable news from the labour market. Understandably the President of the Commission didn’t want to make a big fuss over the constantly and fast deteriorating situation of the EU’s and more particular of Eurozone’s labour market. Fewer and fewer people working is bad news for everything and everybody. It is even worse than rising unemployment because it directly undermines the economy’s potencial. If this Commission’s attitudem of rather covering up the bad developments continues, though, reality will be totally extinct from Brussels and the wooden talk about “measures” would lose all audiences. Deplorable reality Returning to Eurostat’s reality, the EU statistical service announced on Friday 14 June, that the EU and the Eurozone labour force shrunk further during the first quarter of 2013, by 0.4% and 1% respectively in relation to the same period of last year. If someone thinks that these are not big number, it suffices to mention that 1% of Eurozone’s labour force is around 1.5 million people and 0.4% of EU’s labour force is more or less 880,000 men and women. Eurostat estimates that in the first quarter of 2013 221.9 million men and women were employed in the EU27, out of which 145.1 million were in the euro area. The problems of unemployment and recession are more acute than they seem, because they hit particularly the crisis stricken countries of south Eurozone. According to the same source, the highest decreases in employment between the first quarter of 2012 and 2013 were recorded in Greece (-2.3%), Portugal (-2.2%) Spain and Cyprus (both -1.3%), and Italy (-1.2%). What Barroso had to say in view of that is the following: “Priority number one: youth unemployment. There are already many initiatives on the table, put by the European Commission, for instance the Youth Guarantee, the youth employment initiative, but we need to go further…Another important priority is to restore normal lending to the economy, especially for SMEs. The Commission is working with the European Investment Bank to come up with new instruments to foster the financing of the economy”. Not enough Both those initiatives are real but of such limited scope that in reality the unemployed youths and the SMEs of south Europe are left to their fate. For the young unemployed the only real opening is to immigrate, probably to Germany, to search for a ‘petty job’. If they find one, however, they discover it can’t even pay enough for rent and food, let alone to raise a family. As for the SMEs in Greece, Spain, Portugal and Italy many of their owners and employees every year end up in increasing numbers to have no other option left than to follow the youths to Germany. Unfortunately this option hasn’t worked and despite the large numbers of qualified workers, who do search for a job abroad, the vast majority of south Europe’s jobless stay at home. At least there the family can guarantee the very basics. In short, there is not a visible answer to south Europe’s unemployment problem. It’s not visible, because even if one believes those who predict an end to Eurozone’s recession towards the end of this year and a probable small increase of economic activity in 2014, growth will be so weak that will not be able not even to arrest the negative trends. A 1.5% increase in GDP will not be felt at all in the labour market.