The Rise of European Unemployment:
A Synopsis

Engelbert Stockhammer


Unemployment in the European Union has risen from a modest level of around 2% in 1970 to 8.3% in 2002, a level unseen since the Great Depression. The social costs of this mass unemployment range from income losses to severe social and psychological problems that result from not having a job, insecurity about the future, dropping out of social security systems. More than 11 million people are directly affected by this misery, not counting the families and communities of the unemployed. While most politicians do claim that the fight against unemployment is one of the top priorities, in fact policy concerns have shifted during the 1980s and 1990s. Preserving price stability and the integration of European countries along Neo-Liberal lines is what history books will record about these decades, not energetic attempts to create jobs for those who need them.

Obviously this rise in unemployment is but one aspect of the many far reaching transformations that societies and economies in advanced capitalist countries (ACC) have undergone over the past decades. The most prominent of these, that has also called forth a vigorous social opposition, is globalization (Pollin 2000). The internationalization of trade and capital flows is part of the changes that have taken place in the transition from ‘Fordism’ to the ‘Neo-Liberal Era’.1 In the 1970s a phase of capitalist development that has been labeled ‘Fordism’ has come to an end and with the institutional structures and social compromises that carried it (Aglietta 1979, Boyer 1990, Bowles, Gordon and Weisskopf 1986). The class compromise between labor and capital that used to guarantee wages roughly rising in line with inflation and labor productivity growth through collective bargaining has given way to a decentralization of wage setting and a rise of inequality in many countries. Organized labor is in decline in European countries. The role of the state has been redefined. Full employment is not a goal of macroeconomic policy any more. In the EU a treaty that is euphemistically called Pact for Stability and Growth, effectively rules out counter-cyclical fiscal policy and the newly founded European Central Bank is praying to the Holy Grail of price stability when economies are on the verge of recession. While states remain important and powerful actors in the economy commanding 30% to 50% of GDP, their aims are different from the ones in the past.

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The Rise of European Unemployment: A Synopsis

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