Is the jobs recovery around the corner?
A few week ago, the European Commission published its latest economic forecast. Unemployment in the Euro area is projected to drop from 12.2% in 2014 to 11.8% in 2015. This is seemingly good news.
The bad news is that the Commission also predicted that unemployment would begin to drop in two years time in 2012 and 2011. In 2010 they predicted a slight drop for 2011 and then a more serious drop two years later.
The last time the European Commission projected that unemployment would be getting worse, not better, in two years time was in its Spring 2010 forecast, announced right after the Greek bailout on May 5th. Since then, the jobs recovery has always been two years away.
Meanwhile, the Euro area unemployment rates for 2013, 2014, and 2015 are projected to be the three worst years since the creation of the Euro. Not exactly a ringing endorsement of the EC’s crisis management.
Another interesting projection concerns the evolution of real unit labour costs (RULC). Estonia and Latvia are the only countries in the Euro area where growth is expected from 2013 to 2015. Everywhere else, labour’s share of national output is expected to drop.
As Eurostat puts it, RULC “is the relationship between how much each ‘worker’ is paid and the value he/she produces by their work”.
The message from the European authorities to workers across Europe is clear: if you put up with less pay for the same work, new jobs will appear – in two years. Take the pay cut and never mind that we were wrong in 2012, wrong in 2011, and wrong in 2010.