April 17, 2024

Off the Charts: A Jobs Recovery Faster for Some Than Others

While much of Europe has been struggling to recover — and countries in financial difficulty have been forced to adopt austerity programs that are likely to stifle economic growth, at least in the short term — German unemployment is at its lowest level since German unification nearly two decades ago.

The accompanying charts show the changes in unemployment in nine countries, as well as for the 34 countries in the Organization for Economic Cooperation and Development as a group. They show both the change in the unemployment rate since September 2008 and the change in the number of people out of work. The O.E.C.D. includes major industrialized countries and some leading developing economies.

In Germany, the number of unemployed workers rose 6 percent in the first year after the collapse of Lehman Brothers turned a relatively mild slowdown into what became know as the Great Recession. But the number now has fallen 15 percent below the level of September 2008.

Among the other countries in the O.E.C.D., Luxembourg is the only one to recover all its losses.

The relatively small rise in joblessness in Germany may have been partly because of government programs that encouraged companies to keep workers on reduced hours rather than let them go. The rapid recovery reflects the strength of the German export sector, which was enhanced by the fact that many European countries lost competitiveness because of rising labor costs.

When the downturn began, Germany had about 25 percent of the population in the euro zone and a similar share of the unemployed workers. Its population share is about the same now, but it has only 17 percent of the unemployed.

If the euro zone were a fiscal union rather than just a monetary one, there would have been automatic subsidies through unemployment benefits and other programs for the weaker areas. If there were easy labor mobility in the zone, more workers would have moved to Germany. If there were separate currencies, the German mark would have appreciated against the other European currencies.

As it is, none of that happened. Many Germans resent the need to bail out other countries, and many people in those countries resent being forced to cut wages and payrolls in the name of restoring competitiveness.

The unemployment figures show how much the labor situation has worsened in Ireland and Greece, the first two countries to seek bailouts. But it may be a surprise that unemployment in the Iberian peninsula is worse in Spain, which has not needed help, than in Portugal, which does need assistance. Similarly, France and Italy have seen joblessness rise at roughly the same pace, although Italy is widely thought to be in worse shape economically.

The other chart shows two major countries not in the euro zone. Unemployment grew faster in the United States than in Britain, but Britain has shown little improvement while the United States has begun to recover.

Floyd Norris comments on finance and the economy on his blog at nytimes.com/norris.

Article source: http://www.nytimes.com/2011/05/14/business/economy/14charts.html?partner=rss&emc=rss

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