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    Unemployment in Europe: Its Impact in the Future o Essay

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    f EuropeUnemployment is currently one of the biggest challenges facing the European Union. The fight againstunemployment is an essential question that the European Union has to encounter in the short term. Todaysunemployment problem represents the most significant worry of the European Union citizen. Unemployment is thegreatest disturbance of the European economy.

    Approximately 18 million of its people are out of work, an averageunemployment rate of 10. 6%. For instance, in France and Spain, the latest rates are 12. 6% and 19. 9% respectively.

    More women are unemployed than men. Youth unemployment is twice as high as the average. Almost 6 millionpeople have been out of work for more than two years. Employment initiatives of the EUBecause of the need to pursue solutions to the unemployment alarm, the European Commission called for a specialemployment summit of heads of state in late November.

    The European Commission wants to adopt lots of targetsfor the next five years. Under the form of “employment guidelines,” it wants to increase the employment rate from60% to 65%; create 12 million new jobs; cut the unemployment rate to 7%; raise the proportion of the unemployedwho are offered training from the current EU average of 10% towards the average of the three best-performingmember states -that is, above 25%; and reduce the number of people who drop out of the education system by halfwithin a period of five years. The commission wants to switch some of the $221 billion spent every year onunemployment benefits to active labor-market policies;cutting the overhead and tax costs of employing workers; and encouraging more adaptable forms of contract. Furthermore, the Commission is calling for a reversal of the long term trend towards higher taxes and charges onlabor, which have increased from 35% in 1985 to more than 42% in 1995. The commission considers the possibilityof increasing the growth of part-time work, which has been responsible for all of Europes net job gains in the pastsix years and now accounts for 16% of the European Unions total employment. At the same time, the commissionwants part-timer employees to enjoy the same security and benefits as full-time workers, a sure formula that hasreduced the number of part-time jobs created.

    Regarding taxation, the commission recommends reducing taxes onlabor, which have risen from an effective rate of 35% in 1981 to 42% today. Yet rather than just cutting the total taxburden, which Europe badly needs, it suggests offsetting such reductions with higher taxes on energy and capitalthat could well raise unemployment. Germanys unemployment trend compared to other EU membersIn 1989, the then West Germanys rate of unemployment was only 5. 6 per cent.

    This was fractionally above the 5. 2per cent of the US. It was well below the European Unions average of 8. 7 per cent, the UKs 7. 2 per cent, theFrench 9.

    4 per cent, Italys 10. 9 per cent and Spains 16. 9 per cent. In 1996, Germanys unemployment rate was 9percent.

    This was still below Italys 12 per cent, Frances 12. 4 per cent and Spains22. 2 per cent. But it contrasts unfavorably with the 5. 4 per cent of the US and even with the 8.

    2 per cent of the UK. The German unemployment rate is recently at 11. 2 per cent of the labor force. Western Germany jobless rate is9.

    5% while in eastern Germany the rate is 18. 2 per cent. Because of the difficulties of German unification, Germanys job performance seems to be appropriate. However ajustification, although probable, does not change the truth that the country needs more jobs, but has failed to providethem. Following unification what Germany needed was a surge in labor-absorbing growth.

    Rather, what hashappened, has been a decline in employment in both eastern and western Germany. Blame for the eastern failure lieswith the decision to translate western labor practices into east Germany. For instance, pressure for wage equalizationhas pushed compensation per employee to some 70 per cent of western levels. Given low productivity, unit laborcosts are 30 per cent higher in eastern manufacturing than in the west, making the east the most expensive locationin the world.

    Common recommendationsAs the German president, Roman Herzog, said at the European Forum in Berlin, Europe has to break out of the cycleof sluggish economic growth and high unemployment by adopting policies that encourage entrepreneurial andtechnological dynamism. that .

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