Full employment is a good deal for politicians

Article published on March 22, 2005
community published
Article published on March 22, 2005

This article has not been vetted by an editor at Paris HQ

All political parties, and even the EU, have promised full employment across Europe over the next decade. Yet nobody seems to be questioning how they will manage to achieve it

Although the rate of unemployment soared by a tenth in January, affecting 8.9% of the economically active population, European politicians insist on adhering to the objectives set out in the Lisbon Strategy, which are designed to lead to improved economic, social and environmental conditions within the European Union by 2010. Many European Parties are bringing the deadline forward, but confirm that their promises will be fulfilled in due course. Yet the EU Constitutional Treaty, which is currently at the forefront of all political debate, does not really back up such promises, and according to article 205, it does not appear to guarantee higher employment rates over the next decade.

Accommodating everyone

On the one hand, certain European left-wing sectors believe that reducing the working week to just 35 hours will facilitate the process leading to full employment. The massive strikes that recently took place in France have demonstrated that the decision to reduce the working week by five hours has been favoured by the majority. But the European right-wing, representing the interests of medium-sized companies and large businesses, believe that full employment will, in theory, be very stressful for the employers. Conservatives and Neo-Liberals are planning to adopt a different approach from that of the 35 hour week. Both have more faith in the traditional theory which suggests that the lower salaries are, the more capital there is to invest in the creation of new jobs. That is why they are so sceptical towards policies concerning unemployment benefits typical of the Keynesian standpoint, which European social democracy has inherited. Others have supported the long-standing belief that it is possible to reach full employment through an increase in public expenditure. In this particular case, this would be achieved through investments and unemployment benefits, financed by government loans.

The demographic factor

The demography of an area is important when understanding an economic or social phenomenon. It is strange, then, that nobody tends to address this issue. The idea is simple: there is no such thing as a labour market that can take in a massive influx of workers overnight like that which took place during the famous baby boom period. During the forties and fifties, the birth rate increased significantly throughout the whole of Europe. At that time, the rate of unemployment within Europe was very rarely over 4%. The Baby Boom period began to have a massive effect on the labour market from the 1960s and 1970s onwards, and this resulted in an increase in the unemployment figures. Towards the end of the 1980s and the beginning of the 1990s, this entire generation was at working age and, as a result, unemployment rates reached their peak. In the mid 90s, however, they began to retire at a time when the European birth rate statistics were the lowest ever recorded. It has been calculated that by 2015, those born during the Baby Boom period will be enjoying their retirement without having to worry about money. In 1962, the unemployment rate in Spain, for example, was 2%. In 1993, by which time the Baby Boom generation and women were on the job market, the unemployment rate increased to 20%. Nowadays the figure is 11.5%, which is significantly lower than that recorded in previous years. This also seems to be the case in other European countries.

Consequently, full employment should not be a difficult task for politicians to achieve as they will not be required to make much of an effort in the process. Perhaps this is the compensation which they deserve after being blamed for so long for unemployment which was not entirely their fault.