Unemployment in Europe continues its inexorable climb upward. Eurostat reported today that in February 17.13 million people were unemployed in the euro area and 24.55 million in the EU27. New records, as you can see from Eurostat’s own chart below.
A rather clearer picture of the policy-making disaster that this represents emerges if you calculate the monthly changes in the number unemployed, which I have done in the next chart (update: the figures are in thousands):
You see the massive hikes in unemployment when the financial and economic crisis tore into the labour market towards the end of 2008, and their gradual attenuation in 2009. But you also see – and for me this is the key point – the reductions in unemployment from about the spring of 2010 to the same time in 2011. But then suddenly, this progress was thrown into reverse: for a year now, European unemployment has been rising again, at a rate of between 150,000 and 200,000 every month. The total increase is almost 1.9 million (EU27) and 1.5 million (EA17).
I should add: so far. Because rising unemployment threatens to feed back into higher pressure on aggregate demand, the financial sector, on public budgets and on the propensity of firms to invest. Unemployment is a lagging indicator, and it is true that the positive effects of the ECB’s belated policy turnaround at the end of last year are not yet reflected in the data. The recent agreement on the firewall will help to shore up expectations. But these developments, while welcome, resolve none of Europe’s fundamental problems. That would need a new policy approach to postpone austerity, increase (public) investment and bring about symmetric rebalancing of competitive imbalances.
As long as this does not happen labour will keep up its depressing onward march into the unemployment lines.