EU Employment Commissioner László Andor has admitted that the EU is experiencing a "jobless recovery", amid warnings from the International Labour Organisation (ILO) that the situation might not improve this year.
Yesterday (25 January), the ILO warned in its annual employment trends survey that developed economies, including the European Union, cannot expect to see any major improvements in their labour markets this year.
Meanwhile, figures published by the European Commission last week (21 January) show that the average unemployment rate across the EU remained at 9.6% for most of last year, up from 6.7% in March 2008.
More than 23 million workers are currently registered as unemployed across the whole of the EU. This means that the number of job seekers has increased by 46% (some 7.3 million people) since March 2008.
Europe's young people are facing an especially difficult situation. Across the EU as a whole, the youth unemployment rate, for those under 25 years of age who are not in full-time education, is now at a record level of 21%.
László Andor, the EU commissioner for employment, social affairs and inclusion, is concerned that not enough new jobs are being created in the EU, despite signs in some member states that the economy is starting to grow again.
"Currently, on the EU level, we are experiencing a jobless recovery," admitted Andor.
Responding to the latest data and the report from the ILO, Andor underlined the importance of the 'Europe 2020' strategy that was launched last year.
In a statement sent to EurActiv, the commissioner said that "governments have to prioritise job creation, and especially tackling youth unemployment".
"The main challenge for employment policies now is to prevent unemployment from becoming structural and to seek a maximum effect in terms of net jobs creation."
"Fiscal consolidation has to be coupled with structural reforms and more investment in human resources," said Andor.
The ILO's figures show that the EU and other developed economies – including Australia, Canada, Japan and the USA – have suffered much larger increases in unemployment than other parts of the world. Together, these countries account for 55% of the increase in global unemployment between 2007 and 2010.
According to the ILO, developed countries will continue to face persistently high levels of unemployment during 2011. This is despite the fact that several key indicators (global GDP, private consumption and investment) are showing that the world economy has already started to recover from the worst effects of the crisis, which started in 2007.
Policymakers at EU level and in the member states are faced with a difficult dilemma. They have to create the conditions for a sustainable economic recovery that will generate millions of new jobs. But at the same time, they are trying to reduce deficits in national budgets by cutting public spending, which will lead to more people losing their jobs.
Spain the worst – Germany the best
Among the EU member states, Spain continues to face the most severe impacts from the continuing economic and financial crisis, with an unemployment rate of 20.6% at the end of 2010, and a total of 4.8 million people looking for work.
Young people in Spain face an especially difficult challenge in trying to find work, as more than 43% of young people under the age of 25 (not counting those in full-time education) are registered as unemployed.
After Spain, the member states with the highest unemployment rates are Lithuania, Latvia, Estonia, Slovakia and Ireland. These countries all have between 14% and 18% of their workforces looking for a job.
No less than 19 of the 27 EU member states saw their unemployment rates go up in 2010. Alongside Spain, large increases were also seen in Lithuania, Greece, Bulgaria, Slovenia and Poland.
Meanwhile, Germany saw a significant recovery in its labour market in 2010, leading to a fall in its unemployment rate from 7.5% to 6.7% during the 12 months to November.
Finland, Sweden and Malta also enjoyed significant falls in their unemployment rates, while the situation in France and the UK remained stable during 2010.
The member states with the lowest unemployment rates are the Netherlands – only 4.4% according to the Commission's figures – Luxembourg and Austria.
Employment ministers from the 27 member states took part in an informal meeting in the Hungarian town of Gödöllő last week (17-18 January), where they discussed the various ways in which governments can help young people find jobs.
Juan Somavia, director of the International Labour Organisation (ILO), offered the following summary of the recommendations in the Global Employment Trends 2011 report: "In spite of a highly differentiated recovery in labour markets across the world the tremendous human costs of the recession are still with us."
"There is one common challenge: we need to rethink our standard macroeconomic policy mixes and make quality job creation and decent work a central target of macroeconomic policies, alongside high growth, low inflation and balanced public budgets," Somavia said.
Denis Pennel, managing director of Eurociett, the European Confederation of Private Employment Agencies, told EurActiv: "Shining a light on Europe's unacceptable level of youth unemployment is important, but solutions must also be offered. The agency work industry can create the job opportunities needed for young people to enter the labour market. Agency work can offer the vocational and on the job training which will enable upwards transitions into other sectors and full time jobs."
"The EU's response has to prepare for the future of work, and this means reforming the labour markets letting young people down," said Pennel.
"The agency work industry is calling on governments to involve it more in implementing active labour market policies targeting young people. Cooperation between public and private employment services has already proven very successful in bringing young people into the labour market and this is something which can be built on further," he added.
BusinessEurope, the European umbrella organisation that represents employers, told EurActiv: "Labour market conditions in the EU have stabilised sooner than previously expected and job vacancies are rising again. Nevertheless, the situation on our labour markets as a result of the crisis is still difficult."
"The crisis has fully exposed underlying structural weaknesses. For example, the mismatch between skills supply and demand is not a temporary issue. High unemployment rates co-existing with high vacancy rates have been a worrying feature of European labour markets for a long time," the organisation said.
"It is key that reforms are undertaken to reduce the rigidity that characterises many European labour markets. Flexibility is crucial in times of recovery in order to promote job creation," BusinessEurope declared.
Sharan Burrow, general secretary of the International Trade Union Confederation (ITUC), criticised the ILO's emphasis on keeping unit labour costs under control and insisted that low wages do not create the best conditions for balanced long-term growth.
"Higher wages and more consumer demand should be the basis for sustainable growth. The way to address global trade imbalances is through a larger expansion of purchasing power in developing countries, not for developed countries to enter a competitive race to the bottom," Burrow said.
UK MEP Liz Lynne, a member of the European Parliament’s Liberal group (ALDE), told EurActiv: "The financial crisis has hit young people hard and we have to tackle this or face what many experts fear may be a lost generation. But we must not forget everyone else who is unemployed; in particular millions of older people and disabled people are all too often in the same situation."
The MEP said it was important to ensure effective implementation of the 'Europe 2020' strategy and the 'Youth on the Move' initiative. She also highlighted the need to reduce the administrative burden on small and medium-sized businesses.
Julie Girling MEP, who speaks for the UK Conservatives in the European Parliament on employment issues, told EurActiv: "The latest ILO report makes for grim reading and should act as a wake-up call to the EU. Europe's inflexible labour markets are intended to provide greater social justice to workers but surely there is no greater injustice than unemployment? This is particularly true for young people with youth unemployment reaching record highs across Europe."
She said that the European Commission should do more "to encourage greater freedom and flexibility" in labour markets.
Hungarian MEP Csaba Őry, who speaks for the centre-right EPP group in the European Parliament on employment issues, noted that many emerging economies are performing better, while the European Union is "lagging behind" in employment trends.
Őry told EurActiv: "it is of utmost importance for the EU to create more and better jobs, to raise employment levels, with special attention to the most vulnerable groups of society, in order to face the global competition".