How distorted is the EU labour market by this crisis?

José Manuel Barroso, President of the EC, received Mariano Rajoy Brey, Spanish Prime Minister. Spain and Greece both suffer of unemployment rates of up to 27%. (EC Audiovisual Servisec, 05/06/2013 ).

Once more Eurostat, the EU statistical service, went a step forward and produced deep socio-economic analysis with labour market data, than sheer statistical tables. Without colouring its statistics with ideology, the choice of the variables to analyse and present betray a scientific strictness accompanied however with increased susceptibility towards inequality and exclusion. This time it was the Eurostat writer, Martin Teighgraber, who produced an excellent work entitled “Labour market and labour force statistics”. No need to say that he commenced his presentation with the observation that the European Union and its labour market(s) is (are) still under the spell of the five years old crisis.

Invariably a crisis or a deep economic recession hurts more the less qualified workers and of course the unemployed. This credit crunch however which plagues more than half of the European Union and more so Eurozone’s south, going on uninterrupted as from 2008, has sent inequality between countries and individuals to the sky. Even between the worst hit countries there are distinct inequalities. For example Greece and Spain suffer of almost the same overall unemployment rate around 27%. Still in Greece only 51.3 % of the labour force in employment while in Spain this variable reached 55.4% in 2012. Who could imagine some years ago a developed European society with only half of its labour force in productive employment?

Increased inequality, vertically and horizontally

The Eurostat writer observes that “developments in the labour market did not affect Member States in the same way or to the same extent. As a result, the differences between Member States increased…The employment rate for the population aged 15-64 was higher than the EU average (64.2 %) in eleven EU Member States. The highest rates were recorded by the Netherlands (75.1 %), Sweden (73.8 %), Germany (72.8 %), Denmark (72.6 %), and Austria (72.5 %). By contrast, ten Member States did not reach 60 %. The lowest employment rates were observed in Greece (51.3 %), Spain (55.4 %), Italy (56.8 %) and Hungary (57.2 %)”. This is horizontal inequality.

Employment rate persons aged 15-64, 2012

Eurostat graph

However if one takes a closer look at employment statistics one can find hidden loopholes of vertical inequality. It might not be substantiated by hard-core data but in almost all north European low unemployment countries, a large part of those jobs belongs to the ‘novel’ forms of work or training, in most cases without social contribution coverage. In Germany it’s the very badly paid ‘petty jobs’ and in Holland it’s the part timers. This last form of (un)employment continued its upward trend in 2012. According to this study part-time jobs “share of total EU employment reached 19.2 %, up 0.4 percentage points on 2011. Among the EU countries, part-time employment was highest in the Netherlands (49.2 % of employed persons)”.

What do they do?

For decades now the percentage of people working in the services sector has been continuously growing in the European Union and more so in Eurozone. At the same time employment in manufacturing has declined, while jobs in the agricultural sector have almost been extinct in west and north EU countries (below 2 % in Germany, Belgium, the United Kingdom, Luxembourg and Malta). Over all in the EU27, 24.9 % of employed persons worked in industry and construction, while agriculture accounted for 5%.

As a result the largest job provider has become the services sector (public service, education, health, culture/arts, entertainment, recreation etc.), where they have found employment more than two out of every three workers. There are big differences though between member states in the sectorial distribution of employment. According to Eurostat, {The relevance of industry (manufacturing and construction) was highest in the Czech Republic (38.1 %) and Slovakia (37.5 %), and lowest in Luxembourg (12.7 %). The share of market services was highest in Cyprus (48.0 %), and non-market services were most prominent in Luxembourg (42.6 %)}.

The self-employed

On many occasions self-employment is a forced solution for long-term unemployed persons. A small neighbourhood shop or a country tavern are the usual solutions. Add to that tradition and subsidies and Greece appears as the champion of self-employment with 31.9 % of its labour force, Italy (23.4 %), Portugal (21.1 %) and Romania (20.1 %). The lowest proportion was registered in Estonia (8.3 %), Luxembourg (8.4 %), Denmark (8.9 %) and Lithuania (9.7 %). Self-employed persons accounted for 15.2 % of total EU employment in 2012.

No doubt that the south Eurozone countries seem to have paid the dearest price for this ongoing crisis, having suffered the worst deterioration in their labour market situation. Who was responsible for this deep recession is still under discussion. On the contrary it is very obvious that the dearest price for it has been paid by the low skilled workers and the unemployed.