Good News about Jobs in Europe
We have become accustomed to the high unemployment figures in all European countries. Since 1973, Europe created only 1.5 million jobs; during the same period, the United States added 24 million new jobs. But now, for the first time in 13 years, the European Economic Community is predicting a noticeable decline in unemployment, from 11% to 10.5%. Douglas Todd, an economist with the EEC, stated, "Europe is turning the corner on unemployment." The Organization for Economic Cooperation and Development predicts that its 19 European member countries will boost employment by 0.5%, (approximately 800,000 workers), the most since 1979. In 1981, there was a loss of 1.3 million jobs. And the OECD forecasts that 1987 will see an even steeper rise in employment—some 1.2 million new jobs. For Europe, some economists say, this improvement is spectacular."
While the rise in employment is especially strong in the high technology industries and in services, even some of the old manufacturing jobs are recording a comeback. For example, for the 12 months ending in February, manufacturing employment in Germany rose 2.1% while similar employment in Britain held steady after years of decline. This improved picture is a result of better economic performance after years of layoffs and restructuring. The forecasted decline in unemployment is also related to demographic changes, most notably fewer teenagers entering the labour market by the end of this decade. The United Nations projections indicate that the average annual increases in the Western European workforce will decline from one million during 1980-1985 to 692,000 during 1985-1990. This figure will drop to just 365,000 for the 1990-1995 period.
Other factors contributing to the improved performance of the European economies are the decrease in oil prices and a firm control of the increase in labour costs. During the 1970s wages rose dramatically, putting a squeeze on profits and stimulating labour-saving investment. Currently wages are growing at approximately the same rate as prices. Increased flexibility in the labour market has also benefited employers.
The improved economic picture adds up to new hirings by established firms as well as to the creation of new businesses. For example, in the city of Cambridge (a British "Silicon Valley") 250 new companies have sprung up since 1979. In 1985 France created 101,000 new companies, an increase of 20% over the previous year. Assisting the unemployed has also led to new entrepreneurial activities. Job Creation Ltd is a British company with operations across Europe. It specializes in helping the unemployed become self-employed. Companies planning to shut down a plant hire Job Creation to teach laid-off employees how to start their own small businesses. For example, when a synthetic fibre producer, ENKA, closed its plant in Kassel, West Germany, Job Creation helped convert the old plant into a home for more than 50 businesses. "The trick for Europe now will be to stay on course," concludes Shawn Tulley in Fortune magazine. "In many ways the hard part is over; workers have been weaned from spiraling wages that outpace inflation. The pay-off is just beginning" ("Europe Starts to Create Jobs," Fortune, July 7, 1986, pp 88-92).