Europe’s fall­ing un­em­ploy­ment masks a rise in the num­ber of peo­ple who’ve given up on find­ing work

Some work­ing-age Euro­peans have rarely, if ever, held jobs “Af­ter so many years, I can­not sell my­self in any way”

Bloomberg Businessweek (Asia) - - CONTENTS - −Carol Mat­lack, with Gio­vanni Salzano

Euro­peans fi­nally seem to be go­ing back to work: Euro zone un­em­ploy­ment has fallen from 11.9 per­cent to 10.3 per­cent over the past two years. But those fig­ures mask a rise in the num­ber of job­less Euro­peans who have given up look­ing for work, and thus aren’t of­fi­cially counted among the un­em­ployed.

About 4.6 per­cent of work­ing-age peo­ple—11.4 mil­lion in the 19-na­tion sin­gle-cur­rency bloc—say they are “avail­able to work but not seek­ing” a job. That’s up slightly from the same pe­riod in 2013, ac­cord­ing to the Euro­pean Union’s sta­tis­tics agency.

Typ­i­cally dur­ing pe­ri­ods of eco­nomic re­cov­ery, the num­ber of so­called dis­cour­aged work­ers de­clines as peo­ple re­sume look­ing for jobs. In the U.S., some 1.8 mil­lion say they want to work but aren’t look­ing, down from 2.5 mil­lion in 2010. But in Italy and France, as well as some smaller economies, the ranks of the dis­cour­aged are grow­ing even as un­em­ploy­ment inches down. The prob­lem is worst in Italy, where an es­ti­mated 4.5 mil­lion have quit job-hunt­ing and out­num­ber the 2.7 mil­lion of­fi­cially un­em­ployed.

In Italy and else­where, years

of slug­gish growth and high un­em­ploy­ment have cre­ated a pool of adults who’ve rarely if ever held jobs or have been out of work so long that their skills aren’t mar­ketable. “Af­ter so many years, I can­not sell my­self in any way,” says Maria Luisa Te­gon, 52, who last worked in 2007 as a com­puter pro­gram­mer spe­cial­iz­ing in an IBM op­er­at­ing sys­tem that later was dis­con­tin­ued. Te­gon, who says she stopped look­ing for work two or three years ago, lives on her hus­band’s in­come and oc­ca­sion­ally works as a ticket seller at a mu­nic­i­pal park­ing lot near her home in Venice. “I def­i­nitely don’t need my IT knowl­edge and ex­pe­ri­ence to do that,” she says.

Some dis­cour­aged work­ers, like Te­gon, get fi­nan­cial sup­port from fam­ily mem­bers, while oth­ers scrape to­gether a liv­ing from off-the-books jobs. Those so­lu­tions cre­ate other prob­lems, says Giuseppe Ra­gusa, an econ­o­mist at LUISS Guido Carli Univer­sity in Rome. Peo­ple who don’t have le­git­i­mate jobs don’t pay in­come taxes, in­creas­ing the bur­den on their tax­pay­ing coun­try­men. Nor do they pay into pub­lic pen­sion sys­tems, which in Europe are al­ready strug­gling to keep up with a rapidly ag­ing pop­u­la­tion. What’s more, many re­tirees now use their pen­sion in­come “as a stipend for their sons and daugh­ters who don’t work,” Ra­gusa says. Hav­ing two gen­er­a­tions de­pen­dent on pen­sion in­come makes it harder to build political sup­port for badly needed pen­sion re­forms.

Not all Euro­pean coun­tries are af­flicted equally by the dis­cour­aged-worker syn­drome. In Spain the per­cent­age of peo­ple who quit look­ing for work never ex­ceeded 5.1 per­cent, even in the depths of the Euro­pean debt cri­sis in 2013, when Span­ish un­em­ploy­ment climbed to al­most 27 per­cent. Since then, un­em­ploy­ment has fallen to 20.9 per­cent and the rate of dis­cour­aged work­ers is down to 4.4 per­cent.

A key fac­tor in keep­ing Spain’s dis­cour­aged-worker count low was its un­em­ploy­ment-in­sur­ance sys­tem, says Ste­fano Scar­petta, the di­rec­tor of em­ploy­ment, la­bor, and so­cial affairs at the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment in Paris. Spain of­fers rel­a­tively gen­er­ous un­em­ploy­ment ben­e­fits, cov­er­ing more than 60 per­cent of a worker’s pre­vi­ous in­come for as long as two years—but in ex­change, re­cip­i­ents are re­quired to search ac­tively for work. “One of the things we learned from the cri­sis was, even coun­tries that have gen­er­ous ben­e­fits, if they are closely tied to job-search­ing, coun­selling, and train­ing—th­ese are the coun­tries that per­formed bet­ter,” Scar­petta says.

Italy of­fers some of Europe’s skimp­i­est un­em­ploy­ment cov­er­age, with ben­e­fits last­ing no more than 10 months and more than 40 per­cent of work­ers not cov­ered by un­em­ploy­ment in­sur­ance at all. France has gen­er­ous ben­e­fits but is less strin­gent about re­quir­ing peo­ple to search for work, so re­cip­i­ents tend to stay on the dole longer, Scar­petta says. Dis­cour­aged work­ers in cen­tral and east­ern Europe of­ten started their ca­reers un­der Soviet-era cen­tral plan­ning and can’t find suit­able jobs now.

One of the big­gest wor­ries about dis­cour­aged work­ers is what hap­pens to them in their re­tire­ment years. A re­cent OECD study es­ti­mated that some­one who goes with­out a job for five years is likely to have 10 per­cent lower re­tire­ment in­come than some­one who worked con­tin­u­ously. What about those who spend whole decades on the side­lines? Dis­cour­aged work­ers of­ten rely on “the fam­ily net­work and wealth ac­cu­mu­lated by past gen­er­a­tions,” econ­o­mist Ra­gusa says. “When this wealth is eroded, no one knows who will take care of th­ese peo­ple.”

Elis­a­betta Bom­bacci lost her job as a sales­woman in a Rome dress shop in 2013. Now 52, she lives on her par­ents’ sav­ings and cares for her 90-yearold wid­owed mother. “I dream

of hav­ing a job,” she says. “Life is very ex­pen­sive.” But Bom­bacci isn’t look­ing for a job and doesn’t ex­pect to work again. “Shops are look­ing for 25-year-old girls,” she says. “I’ve been cut out of the la­bor mar­ket.”

The bot­tom line In the U.S., the num­ber of dis­cour­aged work­ers is drop­ping, while in Europe it’s ris­ing de­spite a re­cov­ery.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.