Professor David Howden, Associate Professor of Economics at St. Louis University, in Madrid on Europe’s Unemployment Crisis – Some Hidden Relief
The countries that comprise the European Union are today in the throes of the most severe crisis in decades. This is most pronounced in the periphery, and especially in the Southern countries. In Spain total unemployment stands today at 19.4%, and for youths under 24 years of age the picture is even bleaker – 46% of them cannot find work, and those that can are typically on short-term contracts or at tasks that underemploy their skills. The rest of Europe is doing better, but in many cases not by much. On average over 8% of EU citizens are currently without work.
European Unemployment Rates (2011, %) Source: Eurostat
Anecdotal evidence suggests that while the official statistics tell a dire story, the reality is somewhat different. Europe’s south is well known for having a sizable black, or underground, economy. While this brings to thought drug dealers, thieves and illicit pornographers, these categories only encompass a small percentage of total underground activity.
Such policies are ill-advised because they come at a time when many rely on the underground economy for employment. In Spain this is a viable alternative for many that cannot find official work. Making it more difficult to be employed in the underground will surely reduce the size of that unofficial economy, but it will not translate into a growing official economy. Only by making it easier for businesses to operate officially will we see growth in employment opportunities in these areas. Taking away the underground economy without engendering an alternative does nothing but harm those that today depend on such employment for their livelihood.