Unemployment in Europe 2013

Unemployment across the 17 European Union countries hit a record high this month with 20 million people who do not have jobs; among them are many college graduates. A government officer said: “This year is the worst year in the history of the European Union that the unemployment rate raised to 13 percent. Even at the financial crisis in 2008, our unemployment was around 7.5 percent so we are getting worse now than ever.”

However, the current unemployment number is misleading as it hides big disparities among countries. While more 35% of graduates are unemployed in Greece Portugal, and Spain, Germany's rate is at a low 4.5 percent. It means some countries are still doing better than others. Of course, there are many reasons for this but the main differences can be traced to the economic strategies planned many years ago. Greece and Spain's main economies are focusing on low cost manufacturing and tourism but Germany's economy is focusing on heavy manufacturing and technology innovation. If you look at the education systems you can find that the main concentration of school's programs in Greece and Spain are hotel management, entertainment, office management and foreign languages to support the tourist industry as compare with the Germany's education system that emphasize on engineering and technology. In the past several years, many low cost manufacturing were moved to other countries such as Poland, Hungary due to their lower labor costs, therefore factories in Spain and Greece were closed and put thousands of workers out of job. Since 2008 when the financial crisis happened, the number of tourists had been reduced significantly but government spending continued as nothing happen which led to the current economic collapsing. With 58% of people ages 16 to 25 inGreece and Spain are jobless, the situation is getting worst even when governments are trying to improve their economies through aggressive spending cuts and tax increases. The problem is they are doing it without a firm strategy as their education system has not changed to develop skilled workers to meet job market demands. A Greece economist complained: “As people are freely to travel and work anywhere in the Eurozone, we do not have the talents to meet the job market demand. Countries like Germany and UK had to import hundred thousands of skilled software workers from India and China each year to their countries to fill their needs when our young people who could easily go there and work are still unemployed. Instead of improve the education system, our leaders are still hoping that someday tourists will return and everything will return to normal but it is unlikely to happen soon.”

It is a fact that today every country is in need of technological skilled workers. For many years, the U.S., UK, and Germany have been attracting many smart, highly skilled workers with advanced college degrees from all over the world. Last month the technology industry reported that over half of technology workers in the U.S, UK and Germany were “Non-native” people with most came from India and China. A senior executive declared: “Today growth is the key strategy, we need more technology skilled workers to fuel our growth. It does not matter where they come from, as long as they have the skills and speak English, we are interested in them.” Of course, these countries' economy are benefitting by these “Imported skilled workers” as they would go to where the best jobs are but it is also a disadvantage to developing countries as they are losing their best people to build their economies. Recently, several governments have complained that the “Stealing of our best brains are shameful and should be stopped.” But the fact that skilled workers continue to leave for better jobs, better life wherever they can find them.

Last week a Greece politician was asking citizens whether they should focus on a new education system that focuses on science and technology: “Don't we want our own children to have a better share at the jobs in the Eurozone? We must equip our people to participate in the innovation economy.” The answer is overwhelmingly “Yes” but it was only rhetoric because to invest in education, governments must spend money but finding enough money to do that in the time where every budget must be reduced was impossible. The person later admitted: “It is too late to do anything at this time as we are all hopeless. We are paying a high price for the lack of vision. We look at the short term benefit of tourism and low cost manufacturing but ignore the fact that we cannot depend on anyone else but ourselves to build our economy. We did not invest in our future to be a strong nation but rely on other to spend money in our country. It was a very big mistake.” The question is how many countries are learning from this mistake?


  • Blogs of Prof. John Vu, Carnegie Mellon University