Page last updated at 12:38 GMT, Thursday, 19 March 2009

Europe's jobs evaporate as crisis bites

By Nikki Jecks
BBC World Service

Jobless cue in Madrid
Unemployment queues across Europe are getting longer

European Union leaders are meeting in Brussels, as Europe faces some of the worst unemployment figures in a generation or more.

The jobless rate across the 27-member EU in January was 7.6% - but in individual countries like Spain it is almost double that, leading some American commentators to label Europe a continent in denial or a continent adrift.

Ireland's unemployment rate is already more than 10%.

In Europe's biggest economy, Germany, it has inched up to 7.9%.

While in Britain and France the number of unemployed has surpassed two million in each country.

Even Eastern Europe's success stories, the so called "Baltic Tigers", have not escaped the chill wind of rising unemployment.

The last three or four months have been a catastrophe
Iiris Viitmaa
Laid off in Estonia

Estonia's Social Welfare Minister Hanno Pevkur told the BBC's Europe Today programme that last year unemployment was only 4% - but that this year had seen a dramatic change in fortunes.

"We have reached already 7.5% unemployment rate within just a few months," he said.

And he said it was set to get much worse: "Our prognosis indicates that by the end of the year, unemployment may be as high as 15%."


Iiris Viitmaa, who worked for a construction company in the Estonian capital, Tallin, before losing her job, says the decline in the workforce has been sudden.

"It was quite OK half a year ago, and then the last three or four months have been a catastrophe," she says.

For those like Iiris, the hope of finding new work is slim.

"I have got replies saying it was 1,400 or 1,600 [applicants] for one place for jobs like client manager," she explains grimly.

One of the worst-hit countries in Europe is Spain.

As recently as two years ago Spain was creating a third of all new jobs in the European Union, largely on the back of its booming construction sector.

But when the housing bubble burst, so too did the star of Europe's economy.

Its unemployment rate is now nearly 15%.

Job for debt collector
Spain 14.08%
Latvia 12.3%
Slovakia 9.8%
Lithuania 9.8%
Cyprus 4.3%
Denmark 4.3%
Austria 4.0%
Netherlands 2.8%
source: Eurostat

Jakob Von Weizsaecker, a research fellow at Bruegel, a Brussels-based think-tank, believes Spain is now facing a real battle.

"Spain has huge problems - it's the bursting of the real estate bubble, and its labour market is rather complicated," he says.

Part of the problem is its two-tiered labour market.

"Many older people have contracts and it's very hard to fire them, and many of the young people, who are often more productive, have fixed-term contracts that are easier to terminate," he explains.

It is this group that is now bearing the brunt of the job loses - one in three young people under the age of 25 is without a job.

Chantal Hughes, spokeswoman for the EU Commissioner for Employment, Social Affairs and Equal Opportunities says the objective of member states at the moment is to keep people in work, or get them back to work as quickly as possible.

"We have to maintain demand, if people don't have money the economy is not going to be relaunched."

End of the bubble

But some argue the rigidity of the labour market in many European countries is hindering this goal.

Jose Luis Feito, from the Spanish Confederation of Business Organisations (CEOE), says that in Spain this inflexibility, and the high costs that come with it, is contributing to unemployment.

"The lay-off costs in Spain are way above those prevailing in any other European country," he says.

They would have been the first to leave... but there is nowhere for them to go now
Brendan Landers

This, he argues, leads to businesses taking pre-emptive action.

"As soon as you see on the horizon a crisis coming you immediately begin to lay-off people because you know it is going to be extremely costly... to get rid of them [later] if the crisis is very severe," he explains.

Even in countries with more flexible labour markets and less baggage, the downturn is taking its toll.

One of the consequences of rising unemployment is the increasing number of people who leave their place of birth in search of work elsewhere.

That was the stark experience of Ireland in the 1980s.

Cue at a job centre in the UK
UK unemployment made its biggest jump last month since records began

Unemployment then was more than 20% and hundreds of thousands of people packed their bags and left for America, Canada, Australia and Britain.

Many were lured back again in the late 90s when the "Celtic Tiger" was born, much like in Spain, on the back of a construction boom.

But now, with unemployment already at more than 10%, many people are once again considering emigration.

Journalist Brendan Landers left Ireland for Canada in 1984, after being unemployed for more than two years.

"I was ready to kill myself, I was in utter despair," he says.

He returned to Ireland in 2001 after seeing his country's economy growing again, but now he describes that as a "huge mistake".

"It was all just based on the huge big property bubble. The bubble burst last year and the place has gone to the dogs," he says bitterly.

The current downturn is reminiscent of the 1980s, but with one striking difference - this time it is the white-collar workers who are loosing their jobs, according to Brendan.

"In my generation most of the people who left were blue-collar workers... a lot of people now who are going on the dole are solicitors and architects, professional people."

He says in the past the white-collar workers would have avoided unemployment by finding work overseas.

"They would have been the first to leave... but there is nowhere for them to go now."

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