Europe’s ‘nation’ of the underemployed

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More than nine million part-time workers in Europe wished to work more hours, were available to do so, but couldn’t find employers, and therefore considered themselves “underemployed”, according to data released by Eurostat, the statistical agency of the European Union, on 19 April.

These people, representing the population of a medium-sized EU country, are not accounted for in official unemployment statistics.

And yet they work fewer hours than it would be required to make ends meet.

Statistics show that due to the crisis, it has become increasingly difficult to find more working hours, and more people live in poverty, although they are not “officially” unemployed.

“Since the start of the economic crisis the proportion of part-time workers wishing to work more hours and available to do so has grown steadily, from 18.5 per cent in 2008 to 20.5 per cent in 2011 and 21.4 per cent in 2012” said Eurostat in its statement.

Unsurprisingly, the largest percentages of underemployed part-time workers are found in crisis-stricken countries, especially in Greece, where two thirds of part-time workers would like to work more hours, or have a full-time job, but are unable to do so.

The same is true for more than half of part-time workers in Spain, Latvia and Cyprus. On the other hand, in the Netherlands, where total unemployment is relatively low, only 3 per cent of part-time workers would like to work full-time, or more hours than they actually do.

 

The Neets

Even more worryingly, an ever-increasing number of European citizens are not in education, employment or training. This economically inactive population, also known as “Neet” (Not in Education, Employment, or Training) has risen to 8.8 million people in Europe.

Eurostat says: “Among the economically inactive population (those persons neither employed nor unemployed), there were 8.8 million persons aged 15 to 74 available to work, but not seeking work, and 2.3 million seeking work, but not available in the EU27 in 2012, compared with 8.6 million and 2.3 million respectively in 2011 and 7.3 million and 2.4 million respectively in 2008.

"While not part of the economically active population, both groups have a certain attachment to the labour market.

Together these two groups constitute a potential additional labour force of 11.0 million people.”

Even the market-friendly Economist warned about a “generation jobless” in its 27 April issue: “Official figures assembled by the International Labour Organisation say that 75 million young people [in the world] are unemployed, or six per cent of all 15- to 24-year-olds.”

But going by youth inactivity, which includes all those who are neither in work nor education, things look even worse.

The OECD counts 26 million young people in the developed world as “Neets”. A World Bank database compiled from households shows more than 260 million young people in developing economies are similarly “inactive”.

The Economist calculates that almost 290 million youths are neither working nor studying: almost a quarter of the planet’s young people.

 

A lost generation

The aforementioned statistics confirm that Europe, as well as the rest of the developed world, risk losing an entire generation to unemployment, underemployment and total labour inactivity.

According to the latest available data from Eurostat (March), total unemployment in the Eurozone reached an all-time record high of 12.1 per cent.

An overall 19.211 million people are unemployed in the Eurozone and 26.521 million in the EU-27, the latest figure being equal with the combined total population of Belgium and the Netherlands.

The situation in countries under EU-IMF backed “Fiscal Adjustment Programs” is nothing short of dramatic: the unemployment rate in Greece is 27.2 per cent, in Portugal 17.5 per cent, in Spain 26.7 per cent, and in Cyprus 14.2 per cent.

A shocking 6.2 million people are unemployed in Spain alone, more than any other time since the fall of Franco’s dictatorship. If we were to compare Europe with the US, where unemployment is 7.7 per cent, or Japan, where unemployment is even lower (4.2 per cent), the picture that emerges is indicative of the failure of European leaders to deal with the problem.

It is also worth noting that the Eurostat data is indicative of the vast differences between the European North and South, whereby unemployment in Greece and Spain exceeds 26 per cent, whereas in Austria (4.7 per cent), Germany (5.4 per cent), and Luxemburg (5.7 per cent) unemployment remains at relatively low levels.

Nevertheless, given that the recession has now started to affect the core of the Eurozone, with economies such as those of the Netherlands and Germany remaining stagnant, it is almost certain that unemployment will rise in those countries as well.

According to the latest report by the OECD, the European economy is not projected to start recovering substantially before the end of 2013, whereas the European GDP remains essentially "trapped" at low levels since the second semester of 2011, which are much lower than those of 2008.

The inability to recover from the "shock" of 2008 has led many analysts to characterise the current period as the "Great Stagnation", in an analogy to the "Great Depression" of the 1930s.

 

It’s austerity’s fault

Trade unions claim that the reason for this dramatic situation is the implementation of harsh austerity programs across the board in the Eurozone, and especially in the so-called “Program countries” (Greece, Ireland, Portugal, Spain, Cyprus), as well the IMF-inspired labour market deregulation policies.

“IMF labour market advice, as part of the Troika, undermines democracy and risks economic dictatorship across Europe and beyond and will create more divisions and social unrest, without producing any economic benefits,” warned the International Trade Union Confederation (ITUC), on 17 April.

The Greek General Workers Union says that “contractionary policies and savage austerity measures have led unemployment to unsustainable levels, with tragic social consequences.” Such social consequences include, among others, the rapid deterioration of public health in Europe, a continent that enjoyed, until a few years ago, the highest standards of living in the world.

According to a recent article published in the Lancet medical journal and cited by the European Trade Union Institute, suicides, outbreaks of HIV infections, malaria and other diseases are becoming more common in countries where austerity is harshest.

“The economic and social consequences of the crisis (the explosion of unemployment, the runaway loss of job security, the growing inequalities, etc) have reached the limits of what is socially acceptable in a number of EU countries,” said the European Trade Union Confederation, in a statement ahead of the latest EU Council in Brussels.

The message finally seems to be getting across to Eurozone leaders.

Olli Rehn, the EU Commission’s Vice President responsible for Economic and Monetary Affairs, said that the pace of deficit reduction in the Eurozone will slow down markedly this year, to 0.75 per cent of GDP, compared to 1.5 per cent of GDP last year and 1.75 per cent this year in the USA.

Two questions remain to be answered: first, if taking it easier on fiscal consolidation will be enough to restore growth and create jobs in Europe, and second, if it is already too late for millions of Europeans, since their long-term absence from the labour market has destroyed their skills.