Can the national and age groups pockets of unemployment cause irreparable damages to Eurozone?

Marianne Thyssen, Member of the European Commission in charge of Employment, Social Affairs, Skills and Labor Mobility, gave a press conference after the EC proposed to make 1 billion euro from the Youth Employment Initiative available as early as this year. (EC Audiovisual Services, 04/02/2015).

Marianne Thyssen, Member of the European Commission in charge of Employment, Social Affairs, Skills and Labor Mobility, gave a press conference after the EC proposed to make 1 billion euro from the Youth Employment Initiative available as early as this year. (EC Audiovisual Services, 04/02/2015).

It’s a bit awkward to consider a drop of the unemployment rate by one decimal point of a percentage unit as economic growth, and call it a reversal to the positive region, as some Brussels dignitaries and bureaucrats do. Incidentally, the euro area unemployment rate fell to 11.3% in February, down from 11.4% in January 2015. At the same time though retail trade sales and inflation are in the negative region, despite the €60 billion the European Central Bank pumped into Eurozone during March, through purchases of government bonds and asset backed securities.

In early May the Commission is expected to publish its Spring European Economic Forecast 2015. “It will cover 2014, 2015 and 2016 and will include data on Gross Domestic Product (GDP), inflation, employment, budget deficits and public debt, amongst others”. As usually it will be overoptimistic and predictably it will assert that the EU economy has entered a virtuous cycle. But is there enough evidence to support such a sanguine view? Let’s take one thing a time.

Statistical evidence

At the end of March, Eurostat, the EU statistical service, announced its estimate for the February unemployment rate. The relevant Press release says that “The euro area (EA19) seasonally-adjusted unemployment rate was 11.3% in February 2015, down from 11.4% in January 2015, and from 11.8% in February 2014. This is the lowest rate recorded in the euro area since May 2012”. Nevertheless, in reality this change falls well into the area of statistical error.

It is also obvious from the above quote of Eurostat’s Press release that the unemployment rate of February 2015 compared with this same month of the previous year marks a rather noticeable drop. Half a percentage unit is not a small thing but it’s not a cause for celebration either. The problem is that according to the same source still in February this year “23.887 million men and women in the EU28, of whom 18.204 million in the euro area, were unemployed in February 2015. Compared with January 2015, the number of persons unemployed decreased by 91 000 in the EU28 and by 49 000 in the euro area”.

A large country producing nothing?

This is the equivalent of an entire large European country being completely unemployed producing nothing at all. Back to reality, the actual picture is quite discouraging if one focuses on the south of the EU. In today’s Greece more than a quarter of working age population is jobless. The same hopeless condition prevails in Spain with 23.2% of the workers not having work, Croatia with 18.5% unemployed, Cyprus with 16.3% and Portugal 14.1%. If you think that this are small peripheral member states, what about Italy suffering from unemployment of 12.7% and France of 10.6%? In short, the second the third and the fourth economies of Eurozone are in the red labor market wise.

As for the youths (under 25) their condition appears quite appalling. In Greece and Spain more than 50% of them don’t have a job and 42.6% of their Italian counterparts are suffering of the same chronic disease. At the same time some core EU member states like Germany and Austria seem rather immune to this virus, with only single digit youth unemployment rates. Then the ugly reality comes into view proving that the EU labor market is not only in a dreadful state, but it shows a deep fragmentation in national segments.

What about the future?

Unfortunately, the future looks equally gloomy because the crucial indicator of the retail sales points downwards. According to Eurostat, “In February 2015 compared with January 2015, the seasonally adjusted volume of retail trade fell by 0.2% in the euro area (EA19) and remained stable in the EU28”. Retail sales are an infallible gauge of consumption. This last crucial variable is in its turn the main component of gross national product and revenue. Therefore retail sales can be considered as an early pointer of the future trends in overall economic activity. Consequently, a drop in retail sales can invariably lead to a drop in aggregate product and income.

Last but not least developments in the prices front are also hardly encouraging. Headline inflation (consumer prices) remains in the negative part of the chart. According to a Eurostat flash estimate for March inflation in the euro area was -0.1%, that is two decimal points up from -0.3% in February. Producer price inflation developments were also negative. In February they rose by 0.5% in the euro area but only after they had retreated by -1.1% in January. Unfortunately, in this crisis conjuncture we are in for more than five years negative or close to zero inflation rates which are considered risks of existential proportions.

Summing up all that, it becomes apparent that unemployment and economic activity in the euro area will continue to pose grave problems in the foreseeable future. The trouble is that if the long-term economic stagnation that Eurozone suffers continues, the damages caused may be irreversible, although some already are like the lost generation in the South. The pockets of shockingly high unemployment in certain southern countries and age groups may lead to political reversals of unpredictable consequences.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Libya: EU efforts should focus on protecting migrants, MEPs say

This new way of understanding disease is changing medicine

Action needed to end deadly clashes between African herders and farmers: UN chief

The four top Americans who flew to Europe perplexed things about Trump’s intentions

“A Junior Enterprise is run only by students.. there are no professors or managers that can help you solve your problems”

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

Africa-Europe Alliance: first projects kicked off just three months after launch

The German automotive industry under the Trump spell

Fight against climate change and poverty will fail without overhaul of global financial system, says major UN report

Eurozone closer to a deflation – stagnation trap

Why Commissioner Rehn wants us all to work more for less

Syrian Refugees in Germany face distinctly different challenges than those in Lebanon

Consumers suffer three defeats

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

What we take for granted: The EU is not perfect

Who the US and China have trade disputes with

EU makes key TTIP document public as protests get louder

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

3 autonomous vehicle trends to follow in 2019

Second Facebook-Cambridge Analytica hearing: impact on privacy, voting and trust

This is what a planet-wide network of ocean sanctuaries could look like

EU budget: the Common Agricultural Policy beyond 2020

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

Guatemala: UN anti-corruption body will continue working, as Constitutional Court blocks Government expulsion

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

Why the ECB prepares to flood the markets with more and free of charge euro; everybody needs that now

This is our chance to completely redefine the meaning of work

Greece and Ukraine main items on EU28 menu; the course is set

Eurozone: The crisis hit countries are again subsidizing the German and French banks

The Indian miracle state pointing the way to global sustainability

EU Commission: Germany can make Eurozone grow again just by helping itself

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

Press coverage of migration crisis in Europe: a call for collaborative action

Parliament demands ban on neo-fascist and neo-Nazi groups in the EU

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

2 trillion drinks containers are made every year – so where do they go?

Water supply a human right but Greeks to lose their functioning utilities

Darfur: Inter-communal tensions still high despite improved security, Mission head tells Security Council

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

Marking Sir Brian Urquhart’s 100th birthday, UN honours life-long servant of ‘we the peoples’

Mandela, ‘true symbol of human greatness’, celebrated on centenary of his birth

ECB’s first flight in Eurozone’s banking universe will be just a reconnaissance

Syria: ‘Violence, displacement’ and cold kill 11 infants ‘in the past two days’

Tuesday’s Daily Brief: Bicycles for the environment, new leader for the UN General Assembly, UN values, Ebola, Syria and Libya

EU-China Light Bridge in Brussels signals the bright coming of the Year of The Dog

‘Never give up’: UN chief urges all who serve, marking UN Day

Venezuela: UN human rights office calls for ‘maximum restraint’ by authorities in face of new demonstrations

The EU Commission does nothing about the food retailing oligopoly

MEPs want to ensure sufficient funding for Connecting Europe’s future

We need to talk about failure in the social sector

Long live Eurozone’s bank supervisor down with the EU budget supremo

Why Obama asks approval from Congress to bomb Syria?

UK voters sent strong message to May and Corbyn for soft Brexit

COP21 Breaking News_05 December: Ban Ki-Moon Closing Address at COP21 Action Day Innovation, Imagination, Faster Climate Action

The 28 EU leaders show contempt for the European Elections results

WEF Davos 2016 LIVE: “No other problem has jeopardised the EU as much as the refugee question” Joachim Gauck, President of the Federal Republic of Germany, cries out from Davos

Love unlimited

Medical students of today, technological doctors of tomorrow

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s