Thursday, September 09, 2010

Frustration in the Euro Zone

BBC: Trouble in Euroland Amid Record Growth
BBC: Eurozone Unemployment Still at 10%
Bloomberg: European Inflation Slows to 1.6%, Unemployment Holds at Highest Since 1998
WSJ: Euro-Zone Unemployment Holds Steady

Frustration regarding unemployment is on the rise throughout the Euro zone— the sixteen European Union member states that have adopted the euro as their sole currency. In July, for the fifth straight month, unemployment in this region held at 10%, the highest unemployment rate it has experienced since 1998, and above the current U.S. jobless rate of 9.5%. Eurostat, the official statistics agency of the EU, said that these unemployment rates have resulted in 15.833 million people without jobs in the sixteen Euro zone states, and 23 million unemployed in the EU27, which includes all 27 nations of the European Union, including those that do not use the euro. Even though the unemployment crisis has affected all of Europe, it has not fallen evenly across the area.

Austria and the Netherlands have the lowest unemployment rates in the Euro zone, at a mere 3.8% and 4.4%, respectively. Germany has also weathered the economic downturn well and is now helping to bail out some of its European neighbors, including Greece and Spain. German businesses have become more competitive in recent years, and Germany's unemployment rate actually decreased to 6.9% in July. The economic outlook in many other Euro zone nations is in stark contrast to this prosperity. Spain suffers the highest unemployment rate in the Euro zone at 20.3%.

One laid-off Spanish construction worker, Doney Ramirez, has spent the past four months protesting the irresponsible actions of his employer, which borrowed too much money when it was readily available, and now can't pay off its debts. This led to the downfall of the company and the termination of Ramirez's job. After the construction company failed, Ramirez broke in to the site and scaled the crane where he has stayed for the last four months, claiming that he will not come down until he is paid his wages. Former colleagues hoist food to him, and he remains steadfast in his mission of getting his message about irresponsible borrowing across. He is just one example of a European worker who has suffered because his employer took on too much risky debt, in a country that took on too much debt after switching to the euro.

As unemployment continues to be an issue across the Euro zone, frustrations will continue to grow. Some Europeans are now beginning to question whether the euro will survive this period of economic hardship.

Discussion Question: Should the European nations that have weathered the economic downturn relatively well, such as Germany, be expected to bail out their neighbors that have not fared as well, such as Spain and Greece?

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