04 Europe


Reasons for the huge unemployment and low employment figures in the European Union

Vicenç Navarro

Something that is currently occurring in the European Union (in addition to the very worrying high unemployment figures) is a drop in employment, that it, in the number and percentage of people in work. This problem reaches its highest levels in those countries known as peripheral countries within the eurozone, such as Spain, Portugal, Ireland, and Greece, but is it not just restricted to these. In the majority of eurozone countries, the economic system is not creating enough jobs. And this is the main reason why in 2013, that there were no less than 27 million people out of work in the European Union.
The main problem, however, is that this high unemployment and lack of job creation, is to a great extent a direct result of measures instigated by the International Monetary Fund, the European Commission, and the European Central Bank, a group known as the Troika. Austerity policies, cuts in public spending and in public sector employment, deregulation of the market aimed at reducing salaries, and aid given by these institutions to financial capital, meaning predominantly, banks, have all played a key role in lowering the standard of living of the working classes. They have limited their spending power, causing a drop in demand and a reduction in economic activity and in the creation of employment, as well as increasing poverty and hardship.

It should be highlighted that aids to central banks have had a very negative effect on job creation. These aids should have been used to offer credits to small and medium companies and to families. However the aids have not been used to this end, but instead to increase bank’s profits, profits which they have made by buying public debt at extremely high interest rates (thereby decreasing State funds which are needed to create employment) as well as from financial investments in the merging of large companies (which as a consequence destroys jobs) and other speculative activities, that decrease rather than increase employment. There is, in fact, a direct relationship between the size of the financial sector, the speculative activity in the economy, and a lack of job creation (see Frank Roels “What Hope Is There For The 27 Million Unemployed in Europe?” in Social Europe Journal, 27.03.14).

Given this situation, the proposal made, particularly by liberal economists, that the most important thing needed at this time is investment in education and training, is dramatically insufficient. In one of his weekly presentations for Catalunya Radio, on the program by Mònica Terribas, the “home economist” as he is known on TV3, Mr Sala i Martín, emphasized that the solution was a new education system that would promote an entrepreneurial culture among our youth. Independently of whether or not this culture should be promoted, the fact is that whatever type of culture there is, its impact on job creation will be minimal, given that this opinion implies that unemployment is a consequence of the lack of people’s adaptation to supposedly abundant jobs. And that is not true. In reality, in the European Union there are only two million jobs available, which represents a minimal figure for the number of jobs that would be needed to end unemployment (27 million).

The illegal conduct of the European Commission and the ECB
That doesn’t imply that there shouldn’t be a deep reform of the education system, even though I don’t believe that the main focus should necessarily be on stimulating so-called entrepreneurial activity, meaning in general terms, that related to business. The function of education should be, not to create business people, but citizens. What the Commission should do, just as the European Trade Union Confederation has suggested, is to make massive investments to create jobs in important fields, ranging from human infrastructure to physical, cultural and environmental infrastructure, with a huge expansion in investments for care and attention to people and the population. But this will not happen unless there is a significant political change in the EU government, and that of the eurozone.
Today, the governance of the EU and the eurozone is dominated by local political instruments, especially financial capital. And this is where the prominence of the ECB comes in, as lobby of the banks, it has intervened in areas that do not, in fact, form part of its competences, promoting austerity policies. At last, the European Parliament (EP) has questioned and reported the ECB for intervening in areas that are out of its domain. However, even more important is the report by Andreas Fischer-Lescano, lecturer of European Law and Policy at the University of Bremen (a report requested by the European Trade Union Confederation), in which it stated how the European Commission and the ECB have systematically violated current legislation in the European Union, including the Charter of Fundamental Rights of the European Union, a legal text that must be respected -and that is not respected by the European Commission or the ECB. What is happening with the Charter of Fundamental Rights of the European Union, is the same as what is happening to the Spanish Constitution, that is constantly used to impose sacrifices in the name of ownership, but forgets others that, -supposedly, guarantee social and labour rights- and which then become merely worthless bits of paper.

In defence of the trades unions
One last observation. In the European Union there is presently an anti-union mobilization, supported and promoted by the central bank and the major business powers in each EU country and by the European Establishment (European Central Bank, European Commission and European Council), that are highly influenced by financial capital. This avalanche is at its highest in so-called “peripheral” countries, such as Spain, Greece and Portugal, where the anti-union stampede is massive. Today we can see a disparagement of trades unions, portraying them as being responsible for a whole series of damage, including high unemployment. It is argued that by defending permanent contracts they are making it more difficult to contract new employees, according to the insiders versus outsiders theories that I have strongly criticized in my works by demonstrating the lack of scientific evidence that support these. But recently this disparagement has included a campaign putting them into disrepute, intended to portray the class-based trades unions as corrupt, the result of highly political judgments aiming to destroy them. And the media, the vast majority of which have a conservative and neoliberal slant (highly dependent on the central bank for their financing), play a key role in promoting this, ignoring that, in comparative terms, data shows that class-based trade unions are a lot less corrupt than major business powers, political parties, banks or powerful families and/or fortunes.
This campaign brought about personal attacks, for example, against Cándido Méndez, Secretary General of the UGT (one of the most pugnacious and emphatic voices in the world of trade unions), attacks that have reached despicable levels, in which sectors of certain sectarian left-wing activists have also aired their voices. The real cause of this ferocious attack against trades unions was, and still is, to defend workers and their excellent task in defence of the Welfare State of all the Spanish people. Powerful businesses, with the help of their own resources, are aware that in order to get what they want, they need to disable and even destroy the trade union movement. And they are trying to do just this with the help of a large chunk of their resources, financed by bank loans. It’s as clear as that.

Vicenç Navarro

Vicenç Navarro

Professor of Public Policy, UPF-IDEC


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