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A club of high unemployment…

One of the more striking and enduring characteristics of the Single Market is its high rate of unemployment

The distinctive characteristics of unemployment in the Single Market can only be seen and analysed in a comparative perspective. The rate of unemployment of its 12 founder members over the entire life of the Single Market is compared here with 10 independent countries, which seem to be most similar, in terms of their labour market institutions and productivity, to those of the EU 12 – Australia, Canada, Iceland, Korea, Japan, New Zealand, Norway, Singapore, Switzerland and the United States.

The three European countries among these 10 independent countries, Switzerland, Norway and Iceland, are also given separately from the 10. They are of particular interest in any attempt to identify the impact of the EU, since comparison with them provides the best chance, indeed the only chance, of distinguishing European characteristics from EU ones.

Figure 22.1 shows the weighted mean rates of unemployment in the three groups of countries over the years 1993-2011.

Chapter 22 - graph

Over these 21 years, the 12 EU countries have had a significantly higher rate of unemployment than the 10 independent countries.

The contrast between the unemployment rate of non-EU European countries and that of the EU 12 is still more marked. In 18 of these 21 years, EU unemployment has been more than double that of these three countries, and in the other three years, 2004-6, it has been only fractionally less than double. This comparison does not therefore support the idea that there is a peculiarly European high unemployment profile. On the contrary, it suggests that high unemployment is a distinctive and enduring EU characteristic, not a European one.

Weighted means of groups may, of course, hide variations within groups, and these may best be seen in the table below which gives in full the data from which the graph is drawn. The shaded cells of the entries for the EU countries indicate the years in which they have had unemployment rates equal to, or lower than, the mean of the 10 independent countries: Luxembourg and the Netherlands qualify in 13 of the 21 years, and Denmark in 10 of them – but these are a deviant minority, representing just over six per cent of the total labour force of the EU 12. Other EU countries have occasionally joined them, Portugal in six years, the UK in five, Ireland in three and Germany once. Overall, in 52 of the 252 individual years measured, EU members have had unemployment rates equal to or lower than the mean rate of the 10 independent countries.

Deviance on the other side – meaning one of the 10 independent countries having an unemployment rate equal to, or higher than, the mean rate of the EU 12 – is far less common, the exceptions being Australia and Canada in 1993, and the United States in 2009 and 2010. Otherwise, clear blue water separates the independent countries from the EU over all 21 years.

A host of questions

Why is it that unemployment in the EU only began to attract significant media attention when it reached hitherto unimaginable levels in some member states after the financial crisis of 2008? It has been distinctive feature of the Single Market since it began.

Is this distinctively high EU rate of unemployment compatible with the claims of the present Prime Minister, and of several of his predecessors, that the Single Market is good for jobs in Britain?

Why has the distinctive persistence of the EU’s unemployment problem not been the subject of continuous investigation, both in the UK, the European Commission and other member countries, so that we might finally understand why it differs from other OECD countries? Why is it in no-one’s interest to know?

Who is accountable within the EU? And when and where? No doubt most people will hold their national governments mainly accountable for their continuing high unemployment, but the Commission has a department for dealing with employment which receives substantial funds every year to deal with the problem.[1] But when and how are its various programs evaluated and debated? When have commissioners for employment ever been held personally responsible for them? Why is it that the problem has never figured as a major issue in the elections to the European Parliament?

Chapter 22 - table

Source : OECD (2014), “Labour Market Statistics: Labour force statistics by sex and age: indicators”, OECD Employment and Labour Market Statistics (database).DOI: 10.1787/data-00310-en


[1] The Investment for Growth and Jobs, item 1.2 in the EU Budget, is for the most part administered by the D-G for Employment, Social Affairs & Inclusion. It has increased from €36.9b in 2007 to €54.4b in 2014, and totalled just under €346b for the eight years.

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