U.S. now beating European unemployment rates
For many on the left, the lament for years has been: Why can't America be more like Europe? Why can't the American lifestyle be more like the European lifestyle? Why can't our food be more like Europe's? Why can't rustic Americans be more like sophisticated Europeans? The sentiment has resurfaced in recent months as the health-care debate has raged on -- why can't the American health-care system be more like Europe's?
Well, America is now just like Europe in one respect: the unemployment rate.
The official U.S. unemployment rate, reported last Friday, now stands at 10.2 percent. It shot up from 9.8 percent in September, blasting through expectations and well besting the European average.
According to the European Union, the unemployment rate in the 16-nation Euro area in September (the most recent month available) was 9.7 percent. Here is the nation-by-nation breakdown:
- Austria: 4.8%
- Belgium: 7.9%
- Cyprus: 5.9%
- Finland: 8.6%
- France: 10%
- Germany: 7.6%
- Greece: Latest available was June, at 9.2%
- Ireland: 13%
- Italy: 7.4%
- Luxembourg: 6.6%
- Malta: 7.2%
- Netherlands: 3.6%
- Portugal: 9.2%
- Slovakia: 12%
- Slovenia: 5.9%
- Spain: 19.3%
Scanning this data, the instant question has to be: What's wrong with Spain? The answer is: a collapse in the construction industry, as Spain deals with its worst recession in 60 years. Unemployment among young Spaniards (under 25) is a jaw-dropping 41.7 percent. Spain's is an economy built on temporary employment, leading to the radical swings.
The lesson here is the failure -- once again -- of socialism. Spain's socialist government has extended jobless benefits and engaged in massive stimulus spending (sound familiar?) worth about 2.3 percent of GDP.
More importantly, the socialist government refused to cut what are called "firing costs:" how much it costs in severance to lay off an employee. By law, a fired contract employee must receive 20 days' pay per year worked. But because the unions are so strong and threaten to strike at the drop of a hat, many companies pay much more severance than that.
It's a catch-22: Struggling companies need to lay off workers to reduce costs, but the cost of laying off workers is so high, there are no cost savings.
Now such sop-to-the-people popularism is backfiring on the socialist government. Prime Minister Jose Luis Rodriguez Zapatero trails his opposition in opinion polls.
I can't talk about Euro-envy without mentioning France, paragon of sophistication for some, running joke for others.
The French unemployment rate is 10 percent. The under-25 unemployment rate is 24.5 percent, among the highest in Europe.
The French are famous for their liberal unemployment benefits. According to London's Mail newspaper, "Unemployment benefits in France equal 57 per cent to 75 per cent of a jobseeker's last salary, capped at 6,366.80 [euros] a month. Benefits can last for as long as three years, and sometimes longer for people nearing retirement."
I'll do the conversion for you: 6,366.80 euros equals $9,548.70. That's per month.
The Mail was occasioned to write the story in February because French financial professionals living in London were fleeing the collapsing banking houses so they could go back to France and collect fat unemployment checks.
Of course, many economists note that such extensive unemployment benefits are a disincentive for looking for work. Actually, you don't need an economist to tell you that. It's common sense.
-- Frank Ahrens
Sign up to get The Ticker on Twitter
November 9, 2009; 12:37 PM ET
Categories: The Ticker | Tags: European Union, France, euro zone, unemployment
Save & Share: Previous: Stocks up at opening
Next: Stocks up modestly at opening
Posted by: wolf2voices1 | November 9, 2009 1:19 PM | Report abuse
Posted by: wimprange | November 9, 2009 9:45 PM | Report abuse
Posted by: pauhana561 | November 10, 2009 10:42 AM | Report abuse
Posted by: Stevee | November 10, 2009 11:41 AM | Report abuse
Posted by: jorudolph | November 11, 2009 6:44 PM | Report abuse
Posted by: ronsuev | November 11, 2009 9:35 PM | Report abuse
The comments to this entry are closed.