Unemployment alert

Unfortunately for the new member states, especially Romania and Bulgaria, the year 2007 wasn’t just the year of the last extension of the EU, but it also meant the start of the global crisis. Although the crisis affected in different ways, it affected all EU states, the financial and the real economy areas, both the rich and the poor states of the EU.

In a Europe that took pride in its market’s social economy, the concern regarding the evolutions on the labor market got bigger. On the 28^th of September the authorities in Bruxelles made public all the data referring to the level of unemployment in the EU states and how the data changed in the first semester of 2012. Obviously, the fact that most of the important European economies have literally reached their lowest point regarding the economic and financial points of views in 2012, were of no help at all to the labor market. The total number of unemployed people in all the 27 member states of the EU has reached a level never seen before: 25.3 million people. The unemployment rate in the Euro Zone has reached, judging from the bulletins of the European Committee, a new top level (11.4%). Furthermore, the tendencies are considered to be worthy of concern, regarding that in 17 out of 27 member states the unemployment rate has increased. Methodologically speaking, that determining of the unemployment rate by Eurostat is done, starting the definition recommended by ILO (International Labor Organization). According to this definition, an unemployed person is any person between 15 and 74 years old who doesn’t have a job, is available for employment in the next 2 weeks and has actively looked for a workplace in the last 4 weeks. The unemployment rate is determined as a percentage ratio between the number of unemployed people and the active population. Eurostat judges active population as the employed people together with unemployed people.

What is the cause of this? There are a lot of them. The economical growth rate, along with a high work productivity, is not anymore capable of creating new work places, so as to assure a full occupation. The technical progress, on the short term, is the cause of unemployment, more or less, strongly related to the financial ability of countries to assimilate everything scientific research comes up with. The economical crisis, to which we can refer to as decreases or stagnations in the economical activity, is increasing the number of unemployed people, and their integration, in the boom period, can be at a low rate. The changes in the structure of economic sectors, under the impact of diversity in the goods request, of the economical crisis, inevitably lead, on the long run, to a decrease in the request of a job.

In Romania, unemployment has its roots, partially, in the changes in the structure of the national economy, in what concerns the efficiency rate, in order to adapt to a competitive environment. The immigration of a part of the active population in order to seek employment in different countries will increase the offer of labor force inside those states. Emigration has an opposite effect, that of decreasing the labor force in the resident country.

The consequences of unemployment are:

- Nationally speaking, the exclusion of some part of the labor force influences the dynamic of the GDP, meaning that the training, the qualifying of the unemployed necessitated expenses from both the person and the society, expenses which are not to be recovered in the case of long term unemployment.

               -Judging from the person-family point of view, the labor force weakens and it becomes harder to find a job. A great role is the one that the moral and mental status has, which affects the person becoming unemployed in a larger amount than he is affected by the economical side.

In comparison with the rest of the EU states, Romania is in a pretty good position – 7^th place out of 27 countries and an unemployment rate of just 7.1%, more than 3 times less than the European maximum rate, something that should bring happiness to the country. Our concern is due to understanding the fact that imbalance on the labor market in Romania has different ways of behaving. It can be reflected in structural aspects (the unemployed people working in the agricultural area, the great number of pensioners, the great number of emigrants), which makes unemployment in Romania to be much harder to deal with. The number of unemployed people (aged from 15 to 74 years old), estimated for June 2012 is of 735.000 people, decreasing in comparison to the month before ( 744.000) and increasing compared to the same month from the year before (725.000). The unemployment rate among males is of 8.6%, while the one among females is of 6.4%. For adults (25-74 years old), the unemployment rate was estimated at 6.1% in June 2012 (7% of which were men, while 4.9% were women). The number of unemployed people aged between 25 and 74 years old accounts 73.1% of the total number of unemployed people estimated for June 2012.

There are some measures that should be taken in order to deal with unemployment in the EU states. Firstly, coming up with solutions for creating new work places by giving grants to the ones that do, by replacing taxes related to labor force with environmental taxes. Secondly, the exploitation of the huge potential of creating work places represented by the green economy, an area where 20 mil jobs should be created by 2020. Thirdly, the improvement of the health labor work. One last solution could be  supporting highly qualified labor force in the IT domain and the boost to acquire digital skills within the labor force. In Romania, unemployment rate can be decreased by increasing investments and creating modern structures within this area, rational fares and increasing the revenues of the economic agents and of the country itself.

These measures need financial support. Lately, EU announced that it will allocate 2.7 billion euro out of the structural funds to help fight unemployment, after it had already allocated 7.3 billion euro. This money prioritizes in fighting against unemployment within youngsters, which has reached unimaginable rate. The great imbalance in the youth labor force is due not only to the lack of jobs, but also the lack of professional training, which is the main cause why economic agents have doubts whether to hire young people or not. Among youngsters, unemployed also occurs because of their tendency to look for better paid jobs, which slows them from actively integrating. The unemployment among youth people in the EU reached 22.5% in July, and in Romania it has a rate of 25%.

Yet, what happens with the ones not registered? Or with the huge number of those not receiving unemployment benefits anymore? In other words, if we counted them as well, one way or another, the unemployment rate would be much bigger.

Maria-Alexandra Iftene 

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]