EU labor market deeply hit by crisis

09:21, November 24, 2009      

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The European Union (EU) labor market was hard hit by the current financial and economic crisis, with long-term unemployment remaining a serious threat, according to a report released on Monday.

"The current crisis is taking its toll on EU labor markets, reversing most of the employment growth achieved since 2000," the European Commission said in its annual report on employment in Europe.

The report showed employment in the EU has shrunk by over four million jobs since the start of the crisis, and all EU member states except Luxembourg have seen employment contract, most notably the Baltic States, Ireland and Spain.

Meanwhile, the unemployment rate in the EU has remained on an upward trend since spring of last year, and by September 2009 had increased to 9.2 percent, a rise of 2.5 percentage points compared to spring 2008.

In particular, the long-term unemployment remained to be a concern for policy makers since the longer someone stays unemployed, the less chance they have of moving back into employment, the report said.

In recent years, close to 45 percent of all unemployment spells lasted longer than a year in the EU, compared with only about 10 percent in the United States.

"Tackling this issue has become even more urgent since the start of the crisis," the commission said.

However, the report found the level of employment in the EU has nevertheless remained relatively resistant considering the strength of the recession.

In other words, the overall fall in employment has been relatively limited and significantly weaker than the decline in economic activity, in part due to extensive recourse to short-time working arrangements and other measures to tackle the impact of the crisis.

But the report said these short term measures, however important, are not in themselves sufficient to ensure a successful exit from the crisis, and employment policies must focus on preparing for the transition to a low-carbon economy.

The EU is moving towards a competitive low-carbon economy, which will become important driving forces from a labor market perspective.

Although the total net job creation effects may not be very large as creation of new "green" jobs and greening of existing jobs will partly be offset by loss of some existing jobs, the underlying structural changes will involve re-allocation of workers across economic sectors and skill types.

Climate change and related policy measures will therefore have an important impact on the future demand for skills, the report said.

"This report shows how important it is to reconcile our short-term response to the crisis with our longer-term structural reforms. These reforms are essential for the EU economy and labor markets to emerge from the current downturn well prepared for future challenges, in particular the transition to a low-carbon economy," said Vladimir Spidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities.

Source: Xinhua
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