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EU unemployment is a problem. | 70 comments (70 topical, editorial, 0 hidden)
Re: EU unemployment is a problem. (none / 0)
My mother certainly gave up work when she had children. In London.

Other than that, I would say unemployment results from ever increasing productivity.

Justify that please? I'm not sure it's true.

by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:37:05 AM EST
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Re: EU unemployment is a problem. (none / 0)
Well, I don't know that I want to be said to be arguing for the assertion, but it comes to mind that demand is quite limited:

a) There's only so many people on the Earth, so that's a limit to demand anyway.

b) In fact, lots of those people (e.g. parts of Africa, etc.) have next to no money, so they don't represent anything like the average level of demand for goods and services.

Thus, as productivity grows you can actually supply the needs of the entire interested world with less people. Effectively this is what has happened in the car industry. There are ongoing shakeouts because the viable market is saturated. Sure, there is a large potential market in China and India which could reverse this trend, but:

  1. They don't have any money right now, so at this point in time the trend holds.

  2. It's not a given that they will actually get hold of all that much money, is it?
by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 28th, 2006 at 10:49:52 AM EST
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Re: EU unemployment is a problem. (none / 0)
I'll accept it as  a contributory factor without argument. Though it sounds like support for a 35hr week rather than anything else.
by Colman (colman at eurotrib.com) on Tue Mar 28th, 2006 at 10:52:08 AM EST
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Re: EU unemployment is a problem. (none / 0)
Well, absolutely, the problem is:

At the same time, the sheer cheapness of labour means many cannot make a satisfactory living out of a 35 hour week.

by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 28th, 2006 at 10:57:21 AM EST
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Re: EU unemployment is a problem. (none / 0)
But demand per person can increase. My parents demanded neither computers nor mp3-players.

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by A swedish kind of death on Tue Mar 28th, 2006 at 10:53:36 AM EST
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Re: EU unemployment is a problem. (none / 0)
The other part of the theory is of course that demand shifts, so cars may be saturated, but other markets take over.

The problems there are:

a) Whilst "new" products and services are continually created, "old" ones are continually destroyed. It's not clear that the new ones are keeping up.

b) There is an employment mismatch. Old industries employed thousands of people. New industries are generally created to be more efficient from the get go, but that leaves an employment gap.

c) The concentration of capital means that a lot of "new" industries are in "personal services." There are mostly social, rather than economic problems with that, but the social problems at least cause "lag."

by Metatone (metatone [a|t] gmail (dot) com) on Tue Mar 28th, 2006 at 10:55:45 AM EST
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Re: EU unemployment is a problem. (none / 0)
Productivity is only going to decrease hiring if businesses are not willing to invest in increased capacity in the given country, despite those productivity gains.  So it's difficult to say, one way or the other, that productivity produces a change in employment.  The problem is that, to answer that question properly, we would have to consider an untold number of factors.

The statement, in my opinion, can't be justified (nor can it be shot down).  It's not that productivity is independent of hiring.  A different way to look at it would be to say, "Well, my company's producitivity has jumped, so I can afford to hire more workers and produce more goods."  It's the investment decision that's going to determine the employment outcome.

I think we, in the West, are dealing with a period of uncertainty right now -- more so, perhaps, in America than anywhere else, but the effect is not lost on Europe, I suspect.  Productivity growth has been fairly strong in America over the last few years, but, as we all know, private-sector job growth has been a joke.

The reason productivity growth should lead to job growth is that it lowers costs, right?  But this is also coming at a time when there are tremendous opportunities in countries, like China, where lower wages can offset the lack of productivity.

I hope some of that made sense, because I'm about to fall asleep.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 28th, 2006 at 04:47:44 PM EST
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Re: EU unemployment is a problem. (none / 1)
Well, I'd connect it to TGeraghty's post on global over-capacity (relative to demand.) If the paper he refers to is correct and this is something that first turned up in the 1970s then the addition of strong-supply, weak-demand countries like India and China to the mix implies some big troubles if we don't take it inot account.
by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 29th, 2006 at 02:50:26 AM EST
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EU unemployment is a problem. | 70 comments (70 topical, 0 editorial, 0 hidden)
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