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Monday, 2 April 2012

Paradise lost – Unemployment rate in the EU on an overall high

The figures are bleak, no matter at which country you look. Unemployment in the EU has reached a new all-time peak, with an average unemployment rate of 10.8% .

However, it is the south of the Euro-Zone that is seriously suffering from the financial and economic downturn in the Euro-Zone, marking a notable employment gap between the north and the south. While unemployment rate in Germany reaches a historic low at 5.7%, while Spain marks the exact opposite, claiming pole position in the European Union with 23.6%.

Although Germany claims to be economically stable, it does not apply to the overall economic situation of the EU. It is indisputable that the EU is in the middle of a recession, with its southern members facing prolonged economic depression. Brain drain from these countries to the northern member states continue, Germany is witnessing a second wave of migrant workers swarming into Germany in the hope of well-paid and stable jobs.

German policy makers claim the success of the labour reforms of the past few years, and the adapted labour system to short-termed contract workers, so called "mini jobbers" and the increased number of low-income employees, and claiming to have one of the lowest unemployment rates in the EU. However, the German labour market is a very specialised and limited market, mainly for engineers, computer scientists, or pharmacy.

Also, unemployment statistics in Germany exclude low wage workers (i.e. up to 400 euros per month), "mini jobbers", or people going through a re-education process from the official overall statistics. If they included them, the unemployment figures would be around 6 million.

Last week, the EU leaders have agreed on an increased firewall of 800 billion euros, hoping to stabilize the shaken southern euro members, and to avoid further bail-outs in the Euro-Zone. This need for astronomic sums in order to prevent more economic downturns, combined with the increasing overall unemployment in the EU strikes on investors’ confidence to invest in the Euro-Zone.

This will affect the total amount of the firewall – which will inevitably increase -, the overall unemployment figures – which will also affect the low-unemployment countries like Germany and the Netherlands, and last but not least the overall economic performance of the EU as an economic “power”. Europe has significantly lost its economic power over the past few years, and it is not making any effort to stop this trend.

The European economic paradise is no more.

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