Continental drift

By THE DATA TEAM

OVER the past six years, long-term unemployment in Europe has swelled. Around half of Europe's 25m unemployed have been jobless for over a year. Over 12% have not worked for more than four years. Aside from rising poverty levels, the problem brings a further set of difficulties that can render it self-sustaining. Skills are forgotten, confidence drains, fertility slows and the risk of poor health increases. The challenge for policymakers is to stop this cyclical unemployment from becoming structural.

Unsurprisingly, the problem is most acute in southern Europe. More than 60% of jobless Italians have not worked in over a year; in Greece the rate is over 70%. The high long-term unemployment rate is due in part to the fact that Italy simply has high overall unemployment rates, brought on by a severe recession and inflexible labour markets. Moreover, economic woes feed into political ones. Unemployed people are more likely to distrust their politicians and the European Union. This has strengthened the hand of euro-sceptics and populists.

The problem is also acute in the new EU member states of eastern Europe. But unlike southern Europe, many of these countries have recent experience of high long-term unemployment after recessions in the late 1990s and early 2000s. In some places long-term joblessness persisted despite economic recoveries. Slovakia experienced a sharp downturn in 1999; from 2000 to 2007 growth accelerated, and total unemployment fell. Yet the long-term unemployed grew to make up almost 75% of overall unemployment, as workers who had lost their jobs in the bad years were not rehired when economic conditions improved.

In the richer parts of Europe, both long- and short-term unemployment is less of a concern. Germany, alone in the EU, has reduced both its overall rate—as well as that for the long-term jobless—since 2009, due in part to its more flexible labour market (and less generous unemployment benefits). By contrast, Ireland, which was ravaged by a banking crisis, has struggled to get the long-term jobless back into work. Although the overall unemployment rate has fallen, around 100,000 people (or 42% of all those in the dole queue) have been out of work for over two years.

As ever, Scandinavia is Europe’s outlier. The EU’s three Nordic states have its lowest long-term unemployment shares, ranging from 19% to 25% of total unemployment. Such low levels are due partly to shallower recessions, and partly to labour-market measures. Sweden, for instance, introduced training schemes and tax credits for the construction industry, which helped to keep skills sharp and stimulate demand. But with long-term unemployment in the rest of Europe so high, policymakers will have to do a lot more than that to get Europe's persistently jobless back to work.