Eurostat figures have revealed that levels of unemployment in the Eurozone and the European Union (EU) for August were stable compared to July, but for the first time ever there are more than 25 million without employment across the 27 member states.
In the Euroarea there is now 11.4% unemployed, with 10.5% out of work in the EU, both matching the figures for the previous month, but when compared to a year ago unemployment has risen 1.2% and 0.8% respectively, leaving 83,000 more people jobless in the last 12 months. It is now estimated that there are 25.466 million now not working in the EU.
Compared to August 2011, the unemployment rate has increased in twenty member states, with six countries successful in getting people back in to work.
The largest falls came in the Baltic countries, Estonia has now 10.1% unemployment, now slightly lower than the EU’s 10.5% average, with a drop of 3.1%. Lithuania and Lativia both still have high rates of unemployment at 12.9% and 15.9%, but can point to reductions in jobless rates of 2.1% and 1.1% respectively.
Although once again the focus was on the ongoing problem of youth unemployment, as Eurostat figures show that the problem is not going away.
In August this year, the youth unemployment rate was 22.7% in the EU and 22.8% in the euro area, compared with 21.5% and 20.7% respectively in August 2011.
An EU official said: “Youth unemployment is of particular concern, as young people are twice as likely to be unemployed as the adult population. Youth unemployment, especially if prolonged, threatens to harm the self-esteem and economic potential of young people now and in the future.”
“Although the unemployment rate is stable compared with previous months, the figures are much higher than a year ago, and demonstrate the importance of putting in place effective reforms to reverse the trend in unemployment and youth unemployment.”
“Moreover Member States' employment and social situations are diverging more than ever. This is why Member States should urgently implement the 2012 country-specific recommendations adopted last July, and should put in place the measures outlined in the Commission's Employment Package to create more dynamic labour markets.”
He added: “The critical unemployment situation demonstrates the need to end the current economic crisis and to give priority to job creation. There is no quick fix, but the package presented by the Commission in April outlines measures and initiatives to be taken at the both at EU level and by member states to support the creation of not only more but also better and more sustainable jobs.”
Austria is currently enjoying the lowest unemployment rate in the EU with 4.5% out of work, and is joined by its central European neighbours Luxembourg on 5.2%, the Netherlands 5.3% and Germany 5.5%, as the best performers out of the EU member states.
Thomas Url, an economist with the Austrian Institute of Economic Research, put this down to the labour market conditions and incentives. “We have favourable economic conditions as we sort of say lets follow the German lead when it comes to GDP and economic growth. The hiring and firing conditions are very liberal, and we can fire people with the maximum delay of three months and sometime with no delay at all.”
“Unemployment insurance is not so high so that it provides incentives to get back to work, and we also use the flexicurity principle from Denmark, as we look to re-educate and train those without work.”
On the other hand Spain continues to struggle to reduce its unemployment rate of 25.1%, the worst in the EU, and a severe handicap as they try to alleviate themselves of their mountainous economic problems.
“We have had to make amendments since the labour market relationships have stayed the same since 1980. The focus is to have more elements towards internal flexibility.” Explained Iñigo Sagardoy de Simón, an employment partner at Spanish law firm Sagardoy Abogados.
He added: “This means that it hands companies more scope in adapting to the economic circumstance and can offer better alternatives, for example reductions in salary as opposed to dismissals, it’s a move more towards the traditional European direction to have these kind of alternatives. There has been changes implemented, but its too early to say if they have worked”
The European Council outlined their proposals for Spain as part of the country specific recommendations, after examining the National Reform Programme and Stability Programme, that was also overseen by the Commission.
They include labour market reforms by increasing training, advisory and job matching services, and by strengthening coordination between the national and regional public employment services.
The taxation system was also targeted, with a suggested move away from labour related taxes to more consumption based ones such as VAT, and to broaden the tax band of VAT.
“This is definitely the kind of change needed in the tax system, we also need to have a system where the provision of collective agreements with unions are moved away from per sector agreements to a more company base d system..“ Iñigo Sagardoy de Simón added. “This is what is needed to ensure that the scope of working conditions of the future are more relative to the employers of the future.”