Over 24 million people are unemployed in Europe – more than one in 10 of the labour force. Our analysis suggests that roughly one-third of this total is a consequence of a cyclical problem that has arisen in recent years as a result of the financial and sovereign debt crises; the remaining two-thirds represent a structural problem that pre-dates 2007. Exploring the aggregate country and regional data shows that some groups – the young, those with low skills and those living in regions where low-value-added manufacturing used to predominate (but not, contrary to popular perceptions, older workers) – have been finding it particularly hard to find work, not just since the recent recession but for many years. Furthermore, we have found that another one in 10 people say they would like to work longer hours: these people can be classified as ‘underemployed’.
A protracted period of high cyclical unemployment can lead to increases in structural unemployment and inactivity. The good news is that we cannot find evidence that this is happening yet in most European countries, but the fact that it might do in the next few years is a genuine cause for concern. Europe, therefore, needs a significant increase in its employment rate in order to tackle its cyclical and structural unemployment problems. This will not be easy because, as we show, the continued pressures from globalisation and technological change are causing the European labour market to polarise, with ‘mid-skill’ jobs disappearing while the number of high-skill and low-skill jobs grow.
Europe should aim to create more high-productivity, well-paid jobs. To do so, it must do more to develop the skills of young people who do not go through university, and to help individuals to update their skills throughout their working lives. At the same time people need to be incentivised to acquire new skills, and firms have to be encouraged to utilise them. Moving towards full employment in Europe will also involve lifting the employment rates of groups that currently find it difficult to compete in the labour market. The analysis presented here suggests that these groups include women (particularly mothers), young people, those with few or no skills, and those previously employed in declining industries.
SOURCE: Tony Dolphin, Glenn Gottfried, Luke Raikes, Amna Silim and Spencer Thompson, “European jobs and skills: A comprehensive review 2014”, IPPR, March 2104
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