High unemployment has been a chronic condition of the European Union for decades
- Joblessness in the EU is not a symptom of the financial crisis but has been a characteristic of the single market since its inception
- Non-member European economies have had half as much unemployment as the core EU economies for most of the past two decades
- Long-term unemployment was higher in the first decade of the single market than it is now
Unemployment has been significantly higher and more severe in the European Union than in comparable independent economies since long before the financial crisis, a new Civitas analysis shows.
A study comparing the 12 founder members of the European single market with 10 similar but independent economies shows that unemployment has been a ‘distinctive and enduring’ characteristic of the EU.
Using OECD figures covering the past two decades, analyst Michael Burrage demonstrates how the very high levels of unemployment witnessed in recent years are not a recent phenomenon but represent “a chronic condition that has accompanied the single market throughout its life”.
Overall unemployment was almost as high – and long-term and youth unemployment were even higher – during the first decade of the single market as they have been in recent years.
Using international comparisons, Burrage also shows that, throughout the period 1993-2013, unemployment levels have been significantly higher than in many similar economies outside the EU, including the US, Canada and Australia.
Long-term unemployment (for a year or more), including among younger people (15 to 24-year-olds), has also been much higher among the 12 original members of the single market.
Burrage writes: “The EU has not only suffered from a higher rate of unemployment than independent countries, but its unemployment has been especially severe, as measured by the proportion unemployed for a year or more, especially among young people.”
He calculates that about 10.4 per cent of young unemployed people in independent economies remained out of work for a year or more, whereas 29.9 per cent of those in single market countries were jobless for more than a year.
“They have been, in other words, about three times more likely to be scarred by this experience.”
Among all ages, the proportion of unemployed remaining without work for more than a year was substantially more than double the proportion in the independent countries – 43.6 per cent against 16.4 per cent.
That such a large difference has continued over 21 years reinforces the impression that we are dealing with two sets of economies that differ from one another in some fundamental and enduring manner, which does not seem altogether consistent with the vaunted ‘social model’, or ‘social models’ of EU countries, which are thought to distinguish the EU from other countries and in particular from the United States.”
An even starker contrast is drawn with the three most notable European economies that have remained outside the EU, where unemployment has been lower still.
Burrage finds that, in 18 of the 21 years covered, unemployment in the 12 single market founder economies was on average more than double that in Switzerland, Norway and Iceland. In the other three years, 2004-6, it was only just 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.”
Burrage argues that the financial crisis and subsequent Eurozone debt crisis has drawn attention to high rates of unemployment within the EU while also serving to disguise the long-term nature of the problem.
“The financial crisis not only brought the scale of the problem to media attention, it also provided a convenient and plausible explanation of it,” he writes.
“The crisis was often portrayed as some external, primarily Anglo-Saxon, event with little to do with any of the inherent characteristics of single market, and hence diverted attention away from searching for possible causes within the EU itself.
“There can be little doubt that the financial crisis exacerbated the problem, but it can hardly provide a satisfactory explanation of why the EU unemployment has exceeded that of other OECD countries over the entire 21 years of the single market, and indeed for some years preceding it.
“To return to the boom pre-crisis year of 2007 would hardly eliminate the problem.”
The full report, ‘A club of high and severe unemployment: the single market over the 21 years 1993-2013’, is published in the latest in the ‘Europe Debate’ series published by Civitas. It can be read in full here.
The 12 original members of the single market are Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the UK.
Burrage compares them with Australia, Canada, Iceland, Korea, Japan, New Zealand, Norway, Singapore, Switzerland and the US – chosen for their similarity to the EU economies in terms of their labour market institutions and productivity.
Michael Burrage is a sociologist by training, was a Fulbright scholar at the University of Pennsylvania, and lectured at the London School of Economics for many years, specialising in cross-national analysis of industrial enterprise and professional institutions. He has spent spells as a research fellow at Harvard, at the Swedish Collegium of Advanced Study, Uppsala, at the Free University of Berlin and at the Center for Higher Education Studies and the Institute of Government of the University of California Berkeley. He has been British Council lecturer at the University of Pernambuco, Recife, Brazil, and also a visiting professor at Kyoto, Hokkaido, Kansai and Hosei universities in Japan.
His previous Civitas publications include Where’s the Insider Advantage? A review of the evidence that withdrawal from the EU would not harm the UK’s exports or foreign investment in the UK (2014).
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Europe Debate No. 4: A club of high and severe unemployment: the single market over the 21 years 1993–2013