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Unemployment iwd 21. May 2015

EU regions are drifting apart

The gap between unemployment levels in the various regions of the European Union has widened over the last ten years. While the number of job seekers has fallen in Germany and Eastern European countries, the situation in some parts of Southern Europe has deteriorated dramatically.

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Assistance for states in crisis, development programmes for underdeveloped regions – the EU does a lot to advance economic development in Europe and narrow the gap between the living conditions in its member states. Nevertheless, the discrepancies remain significant – and this is especially apparent when looking at unemployment levels in the 276 regions of the EU (see box).

The ten regions with the highest unemployment levels are located in Greece and Spain (see diagram):

In 2014, Andalusia had the highest unemployment rate in the EU (35 per cent) – and the Canaries and the Spanish enclaves on the African continent did not fare much better.

The first region outside Spain and Greece can be found in position 18 of this negative ranking: Calabria in Italy. As regards the regions outside Southern Europe, the highest unemployment rate is found in Brussels, in position 35. Furthermore, regions in Croatia, Portugal, Slovakia and Cyprus are among the 50 hardest-hit in the EU.

Wherever unemployment rates are high, young people are most affected. In the Spanish regions of Andalusia, Ceuta and Castile-La Mancha, more than 60 per cent of people below the age of 25 who are available to the labour market are unemployed. In many Italian regions, too, youth unemployment is high – even in areas where overall unemployment rates are moderate. In some Romanian, Belgian and British regions, many young people are out of work, too.

Compared to these regions, conditions in Germany resemble paradise on earth. Nine out of ten EU regions with the lowest unemployment rates are located in Germany, with Upper Bavaria in the best position with 2.5 per cent. Even the region of Berlin, which in recent years had the highest unemployment rate in Germany at 9.8 per cent, managed 95th place out of the 276 EU regions.

In addition to the German regions, Prague as well as some Austrian and British regions are among the regions with the lowest unemployment rates of less than 4 per cent, which economists class as full employment.

Furthermore, in Germany, Austria and The Netherlands, the number of unemployed youths is relatively low – even in areas where the overall situation in the job market is less than rosy. In the Dutch region of Flevoland, for example, recent unemployment levels have neared 10 per cent, similar to those found in Liguria in Italy. However, youth unemployment in Flevoland “only” stood at 18 per cent, compared to 45 per cent in Liguria.

It’s hardly surprising that in regions of low unemployment, employment rates tend to be high:

In Upper Bavaria, for example, 79 per cent of all people aged 15 to 64 are gainfully employed, and this figure is much higher than the EU average of 65 per cent. Higher-than-average employment rates are also found in parts of Scotland, central England and Sweden. By contrast, in the Southern Italian regions of Calabria, Campania and Sicily, less than 40 per cent of the working-age population are gainfully employed, and employment rates have deteriorated over the last ten years.

If you compare today’s job market situation with the job market situation before the financial and economic crisis, it is apparent that Southern Europe has not always been a problem child. Indeed, in 2004, many Greek regions were in a much better position than today – at 6 per cent, the unemployment rate in Crete was even lower than that of Tübingen. Since then, however, unemployment in the university town of Tübingen has been more than halved, while it has increased to 24 per cent on the Greek island, so that Crete now occupies position 260 in the EU ranking of its 276 regions.

Aragon in Spain and the Algarve in Portugal are also among those regions which have seen a dramatic increase in unemployment rates. Spain had already had to deal with unemployment rates of more than 20 per cent back in the 1990s. By 2007, it had managed to lower its level of unemployment to 8 per cent, however, the debt crisis then set the Spanish job market back several decades.

With the exception of Ireland, North-Western Europe has, in recent years, been spared a major labour market crisis. While, since 2004, unemployment rates have seen a marked increase in some British regions, such as Wales and Yorkshire, and some parts of the Netherlands, such as Zuid-Holland, overall unemployment levels in these regions have remained below the European average as they had been relatively low from the outset.

Meanwhile, in addition to the German regions, many Polish regions have been experiencing improving employment levels. The region of Lubuskie saw the most pronounced improvement: here, the unemployment rate dropped from 25 per cent in 2004 to 8 per cent in 2014.

Similar trends were observed in Lower Silesia and Western Pomerania. Other Eastern European regions have also seen falling unemployment levels, notably Prague in the Czech Republic, Western Romania and parts of Slovakia.

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