The seemingly never ending nightmare

Unemployment peaked this month to a 10 year high and an end is nowhere in sight.




For so long now, as we have seen in the previous blog’s the newspapers are hailing that the end of the recession has either arrived or is in sight. The newspapers have been concealing many vital facts of where the economy is truly standing by focusing the readers attention on the side story, e.g. when the newspapers wrote about the all time high of gold and not focusing on the weak dollar (as Phillip vividly described in this blog a few weeks ago). However, reading today’s newspaper, although it does not come as a shock, it comes as a crushing blow to a young student hoping to find work after university: unemployment has reached a ten year high in the Euro zone.


October is the 15th consecutive month of rising unemployment in the Euro zone, reaching 9, 7% in the 19 Euro countries and 9, 2% in the 27 Euro nations. Since September of 2008 when the Lehman Brothers bank collapsed marking the official starting point of the recession, 5 million people lost their jobs, meaning a total of 22 million people are unemployed in the EU. The highest figure of unemployment is found in Latvia with 19, 7%, followed closely by Spain with 19, 3%. In Spain there has been an 8.3% increase since the collapse of the construction sector.



(unemployment rate in the EU for September 2009)


Although the figure is substantial, it is less then what economist had predicted, this is due to government measure to combat the crisis. State scheme such as: helping the car makers from having to shut down factories, or short working hours, where employees have shorter working hours but their pay is topped up by the government, this has been extremely popular in Germany and has been implemented in 20 of the 27 EU member countries. The fact that the government is “pouring tens of millions of euros into the economy to prevent a social crisis”, has also helped keep the unemployment rate lower then expected. Is this really the right way? Are these measures not too short term? Yet the European leaders have announced that they would continue to do so and that it would be too early to withdraw their emergency measure aimed at tackling the recession, as this would only help unemployment skyrocket.

However, economist are warning that most of these measures are only short-time working schemes, so what will happen in the future? Can we expect a significant drop anytime soon? Clearly the economy and unemployment walk hand in hand, as in the first three months of 2009, the economy shark by 2.5%, not only due to rise in unemployment, but it certainly is a major component affecting it. Recovery does not seem in sight, economist predict that unemployment shall rise till mid of next year to 11.7%, there shall be no end to it as long as the economy is still in recession.

The EU is looking into a dark whole whereas the American economy is reported to have risen 3.5% this month. How can this be when since 2008 in the Euro zone unemployment has risen by 2.5%, whereas in the US unemployment has risen 5%? However, both the US and the EU are now at nearly 10% unemployment, the US just slashed jobs more aggressively in at the beginning of the recession, whereas in the EU jobs “slowly faded”. Should the EU have been harsher on its people, should we have followed Darwin’s theory “survival of the fittest”? As we can see from the figures the US seem to be recovering, so why are we still so far staring at the empty hole? It must be said before we critic the EU, that from other articles, there seems to be a strong trend to decreasing consumption in the US this month, so maybe even though the economy maybe starting to recover, at least to a certain extent, the people are still sceptical about where the economy shall be going.

This was a rather interesting read, as I believe we are all affected by this in one way or another. I am definitely noticing, from the countless CV’s I have sent only to be told that although my profile would suit their needs, the market simply does not allow for hiring and if it does there are dozens of qualified MBA Harvard or Oxford students applying for the same job. In an economy that is so unstable, where the recession is still clearly an issue, why would a company want to hire an undergraduate student, and invest in that person, when they can have a highly qualified and experienced person instead? As they say “life is a biaatch” and one has to shot for the moon, so as to land upon the stars!

The Financial Times was my favourite article for this blog, as it clearly states the facts of what has been happening, it briefly states how it is affecting the economy in general, although it could go even further in-depth. It is an interesting all round read and gives you all the informational as well as background information that one needs.
Reading the NZZ as always gave me good background knowledge and from other articles I was able to determine that although the US economy seems to be on the rise, not all is in the hunky dory just quite yet. However, again the Swiss newspaper had taken a whole paragraph from Reuters, they seriously seem lazy, or is the Swiss news world so secluded they can not obtain vital world information quickly enough, can they not draw their own conclusions? I feel there is no excuse to copy, paste and translate articles from other newspapers. Apart from that Bloomberg and especially Reuters was quite a heavy read.

Till next week,

S



Sources used:

NZZ
30.10.09
Höchste Arbeitslosigkeit in der Euro-Zone seit 1999 http://www.nzz.ch/nachrichten/wirtschaft/aktuell/eu-arbeitsmarkt_1.3947229.html

NZZ
29.10.09
Amerikas Wirtschaft wächst wieder
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/wirtschaft_in_den_usa_im_dritten_quartal_um_35_prozent_gewachsen_1.3942812.html

NZZ
27.10.09
Gedämpfte Kauflaune in den USA
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/gedaempfte_kauflaune_in_den_usa_1.3933450.html

Reuters
31.10.09
Euro zone jobless at 10-year high, prices drop
http://uk.reuters.com/article/idUKTRE56U25H20090731?sp=true

Financial Times
30.10.09
Eurozone unemployment edges higher
http://www.ft.com/cms/s/0/5c76987e-c543-11de-8193%2000144feab49a.html?nclick_check=1

Bloomberg
30.10.09
Europe Consumer Prices Decline as Jobless Lines Grow (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a13AEgEWZpAY