Saturday, January 2, 2010

Unemployment in Europe: it's not just Spain

The New York Times published an article about Spain's "soaring" unemployment rate among those aged 15-24. Across Europe and in the US, the unemployment rate for young workers surged in 2009.

Labor reform is needed in Spain, which is the overall theme of the NY Times article; but the article confuses slightly the long-run phenomenon that is Spain's growing structural unemployment versus the cyclical surge in unemployment across Europe:
But the sharp increase among young people is particularly problematic. It has jumped from 17.5 percent three years ago at the height of the boom to the current 42.9 percent.
A three year rise in unemployment is a structural issue in Spain, rather than surging unemployment rates in 2009, which is a cyclical trend.

The chart illustrates the unemployment rate for those aged 15-24 across the European Union when available and for the US (for comparison). The data are sorted by largest % YTD (year to date) rise in the unemployment rate from Ireland (largest gain) to Belgium (smallest gain). Sorting the data this way focuses on the cyclical unemployment rate rather than the structural rate, i.e., the unemployment rate in Spain is starting from a very high base, 32.5% in January 2009.

The rise in Spain's unemployment rate for young workers 15-24 is great, +32.0% since January; but that in Ireland (52.7%), the Czech Republic (47.1%), Denmark (37.9%), Bulgaria (32.8%), and Slovakia (32.2%) are larger in magnitude. Across Europe, younger workers are being forced into unemployment - or schooling, which is common for this cohort.

The data indicate that Spain's unemployment rate is the highest. However, this is an incomplete picture since just 21 out of the 30 (27 EU member plus 3 candidate) countries listed unemployment rates for workers aged 15-24 (you can see the Eurostat labour - labor in American English - market survey data here) in the latest month, October 2009.

Including those countries not listing monthly 15-24 unemployment data, and focusing on the total unemployment rate, Spain's surge is not the strongest nor is its level the highest.

According to the OECD (in the 2009 Economic Outlook No. 86), Spain's labor market problems have likely peaked, while those in other parts of Europe are only getting started (like that in Germany, which could rise significantly in 2010):
the largest part of the total expected increase in unemployment in Spain has already taken place, while in other European countries significant further increase in unemployment is expected going forward.
The Baltic States are taking a beating, Latvia's unemployment rate was already 20.9% in October. And since the Baltic economies are expected to drop (see the European Commission's autumn forecast) the most in 2009 and 2010, a lagged indicator like the unemployment rate is bound to rise further.

Rebecca
Wilder

10 comments:

  1. Love your post on Angry Bear today - how is the deficit - growing and projected to grow - going to affect things? Talk about Medicaid - AZ is going to have one major debt if/when the Healthcare plan is enacted, and so will other states who have to fund it.

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  2. Thanks for looking at the numbers. I'm an unemployed (not by choice!) freshly graduated US individual, and nothing bothers me more than those who don't look at the numbers. Second, I suppose, to those who look at the numbers and jump to conclusions.

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  3. This data doesn't bode well for the coming year if you ask me. Heard a radio broadcast today with Gerald Celente and combined with a number of things he had to say it leaves me a bit worried. I see a lot of disillusionment on the horizon.

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  4. You don't have all the E.U. countries in the chart. My guess is that you copy paste data. Better write something valuable next time.

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  5. If you have EVER been to the Eurostat database, you would know that the data for any given series is rarely available for the entire cross-section the E.U. countries. I present what's available at the time. Eurostat does not list the 15-24 aged unemployment rate for Greece more recently than September 2009.

    Rebecca

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  6. Hi Oregon,

    It's been a few months - did you find employment? If so, congratulations. If not, my best wishes for you, and I hope that the government gets an acceptable jobs bill going soon. Times are certainly tough right now.

    Rebecca

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  7. <p> 
    </p><p> 
    </p><p>The reason for the economic crisis in the United States is very complex and difficult to explain. <span>The unemployment rate in America is a major issue that arose in the late 2000s and is still a problem to the present time. Because of businesses and government based public establishments having much less money, many people have been getting laid off their jobs at a very high rate, causing many families to suffer. Looking back to better times, in 2000, the unemployment rate was </span><span><span><span><span>5,692,000, the lowest it had been in a long time, but by 2009 it rose to roughly 14,264,583 ( </span></span></span></span>Pinyo<span><span><span><span>)</span></span></span></span>
    </p><p><span><span><span><span>. </span></span></span></span><span>However, when you trace all of the economic issues, they all seem to steam from greed and bad business practices</span><span> ( </span><span>Pinyo</span><span>).</span>
    </p><p><span> </span>Over the years, mortgage lenders were happy to lend money to people who couldn’t afford their mortgages. They had nothing to lose, so they did it. Lenders made it easier to borrow money, and the higher demand drove up house values. People were borrowing money, and told that if they couldn't pay at the present time, they could do so later on in life. Eventually when they had to pay for their houses, many could not. It, of course, put many in financial trouble. It caused lenders to suffer, and they had to deal with more foreclosures than they could actually sell. The economic problem is because of greedy lenders and greedy buyers, or buyers who did not know what they were doing. This is, however, only one factor contributing to the economic crisis. The economic crisis is the reason for the unemployment problem <span>( </span><span>Pinyo</span><span>).</span>
    </p><p><span> The major unemployment rise in America has been going up for some time, starting from when Bush was in office, to now where Obama is in office. Before Barrack Obama got elected, and after he did, he promised the American people that he had a plan to fix the economy and unemployment. However, he has doubled the country's debt with his noneffective strategy to get us out. Statistics show that for the most part it has only gotten worse despite government efforts. On </span>April 4th, 2009, <span>663,000 jobs vanished within the month, raising the official national unemployment rate from 8.2% to 8.5%, a level not seen since 1983. Job losses were spread across a wide variety of industries.</span>
    </p><p><span> </span>
    </p><p> </p>

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  8. <p><span>For example, manufacturing lost 149,000 jobs, the leisure and hospitality industries cut 22,000 jobs, and the mining industry shed 1,000 positions (U.S. Unemployment Rate Soars; Jobless Level At Great Depression Levels). According to the charts, in September 2009 the unemployment rate was up to 10%, total. The highest it has ever been since the great depression. In January 2010, however, things start to improve a little bit. The unemployment rate dropped to 9.7%, but most people would say that that's not good enough of an improvement.(</span><span><span><span><span>HistoricalLaborForce/UnemploymentDatafor</span><span>UNITEDSTATES)</span></span></span></span>
    </p><p> <span> It would also appear that racism contributes to the number of unemployed Americans. This is definitely true, because 15.8% of the unemployed American population are African Americans, the race suffering by far the most. Hispanic/Latino are at 12.4%, Caucasian at 8.8%, and Asians at 8.4%. (Unemployment: Who's Been Hit the Hardest?)</span>
    </p><p><span>Another reason why the African American population is suffering the most is because a large population of them live in the very urban poor parts of cities where it would be difficult to find a job. There are 18 Urban US cities where more than 50% of the population is black (AFRICAN-AMERICAN POPULATION).</span>
    </p><p><span>They are the following: Detroit, Gary, Birmingham, Jackson, New Orleans, Baltimore, Memphis, Atlanta, Washington DC, Richmond, Savannah, Newark, Flint, St. Louis, Cleveland, Shreveport, Portsmouth, and Baton Rouge. This information was collected in 2005. (</span><span><span>A&M Bulldawg</span></span><span><span> </span>)The 2010 most estimated black US cities are: New York, Alabama, California, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Mississippi, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas and Virginia. From looking at the states you notice many of them are in the deep south, where poverty is at it's highest, where the most unemployment is going on, and where most African Americans live. The listed states that are located in the south, are: Alabama, South Carolina,</span></p>

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  9. <p><span>Florida, Georgia, Tennessee, Virginia, and Maryland. (</span><span><span>A&M Bulldawg</span></span><span><span> </span>) The race suffering 2<sup>nd</sup>, is Hispanics. The majority of them in the US live in South Western states. Caucasians/whites are in 3<sup>rd</sup> place for unemployment, and the highest percentage of them in the US live in New England, Rocky Mountain states, and the Midwest. The Asian unemployment rate is the lowest (</span><span>White_American#Geographic_distribution</span><span>) Pinpointing a geographical majority of Asians in the United States is hard because there are so few of them. They are spread out everywhere, but the states that have the most Asians are, Hawaii, California, and New Jersey. (Asian people)</span>
    </p><p><span> Not only is the unemployment high in the United States, but many other countries across the globe as well. In fact, many countries (but not all) in Europe has been for a long time had higher unemployment rates than in the US. Italy is 7.4%, France 10%, and Spain is the worst off at 19.3% unemployed (</span>U.S. now beating European unemployment rates).
    </p><p><span> However, one must remember that the system in Europe is much different in America. It is not so bad to be unemployed in Europe. In Europe when you are unemployed you get a lot of government support, and in the United States that support is much less, making it not an option to remain unemployed. Not only that, but some predict that America's unemployment rate could top Europe's in the near future. </span>
    </p><p><span> The question of when the unemployment crisis in the United States will end, is impossible to say. Right now there is absolutely no end in sight, and no real improvement. Some spectators believe that the United States will eventually have another economic depression. </span>
    </p><p><span> </span></p>

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  10. I am a New Zelander and have visited Europe: From what i have seen i think the Europeans have been living beyond their mean for some time and have been oblivous to the changes in the global political landscape. The transfer of wealth eastward will continue and accelerate; the Europeans will have no choice but to accept devaluation of their currencies and a much lower standard of living. They together with the Americans will have to adapt to broard changes including demographics. The future is not good; There will be civil war in Europe as countries implode under religous factions and America slides into a great Depresion. The West dictates everything for the moment but time is running out; Many countries wish to be free of this and historical wrongs are always deep rooted. America has created an empire-power now is being transfered; transfer can be by 2 means-peaceful or by force; Empires historcally have not favoured the peaceful path-there will be war with China: History has a habit of repeating: The crash of 2008 was associated with a defined debt inertia; The only thing which differed was how it was managed-do nothing and the great depression of 1929 occurs-throw money at it and the curve is smoothed out but elongated it-so get used to a long recession of 15-20 years-but now today is perhaps more volotile than in 2008 becuase all the money printed has added a huge amount of additional inertia above the horizontal line: President Roosevelt threw money at the Great Depression too and it made little diference: It took a war to return to full employment: This time is similar-How will the US cope with a China for which it has little answers: There will be many troubles ahead as a new world order comes about. People say these things are not possible but what is not can be.

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