Unemployment in the euro area

Speech by Mario Draghi, President of the ECB,

Annual central bank symposium in ackson !ole,
"" August "#$%
No one in society remains untouched by a situation of high unemployment. For the unemployed
themselves, it is often a tragedy which has lasting effects on their lifetime income. For those in
work, it raises job insecurity and undermines social cohesion. For governments, it weighs on public
finances and harms election prospects. And unemployment is at the heart of the macro dynamics
that shape short- and medium-term inflation, meaning it also affects central banks. Indeed, even
when there are no risks to price stability, but unemployment is high and social cohesion at threat,
pressure on the central bank to respond invariably increases.
$& 'he causes of unemployment in the euro area
he key issue, however, is how much we can really sustainably affect unemployment, which in turn
is a !uestion " as has been much discussed at this conference " of whether the drivers are
predominantly cyclical or structural. As we are an #$ country monetary union this is necessarily a
comple% !uestion in the euro area, but let me nonetheless give a brief overview of how the &'(
currently assesses the situation.
(igure $) Change in the unemployment rate since "##* + the euro area and the US
'he long recession in the euro area
he first point to make is that the euro area has suffered a large and particularly sustained
negative shock to )*+, with serious conse!uences for employment. his is visible in Figure #,
which shows the evolution of unemployment in the euro area and the ,- since .//$. 0hereas the
,- e%perienced a sharp and immediate rise in unemployment in the aftermath of the )reat
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Recession, the euro area has endured two rises in unemployment associated with two sequential
recessions.
From the start of 2008 to early 2011 the picture in both regions is similar: unemployment rates
increase steeply, leel off and then begin to gradually fall. !his reflects the common sources of the
shoc": the synchronisation of the financial cycle across adanced economies, the contraction in
global trade following the #ehman failure, coupled with a strong correction of asset prices $ notably
houses $ in certain %urisdictions.
From 2011 onwards, howeer, deelopments in the two regions dierge. &nemployment in the &'
continues to fall at more or less the same rate.
(1)
*n the euro area, on the other hand, it begins a
second rise that does not pea" until +pril 201,. !his diergence reflects a second, euro area-
specific shoc" emanating from the soereign debt crisis, which resulted in a si. quarter recession
for the euro area economy. &nli"e the post-#ehman shoc", howeer, which affected all euro area
economies, irtually all of the %ob losses obsered in this second period were concentrated in
countries that were adersely affected by goernment bond mar"et tensions /Figure 20.
Figure 2: Relationship between financial stress and unemployment
!he soereign debt crisis operated through arious channels, but one of its most important effects
was to disable in part the tools of macroeconomic stabilisation.
1n the fiscal side, non-mar"et serices $ including public administration, education and healthcare
$ had contributed positiely to employment in irtually all countries during the first phase of the
crisis, thus somewhat cushioning the shoc". *n the second phase, howeer, fiscal policy was
constrained by concerns oer debt sustainability and the lac" of a common bac"stop, especially as
discussions related to soereign debt restructuring began. !he necessary fiscal consolidation had
to be frontloaded to restore inestor confidence, creating a fiscal drag and a downturn in public
sector employment which added to the ongoing contraction in employment in other sectors.
'oereign pressures also interrupted the homogenous transmission of monetary policy across the
euro area. 2espite ery low policy rates, the cost of capital actually rose in stressed countries in
this period, meaning monetary and fiscal policy effectiely tightened in tandem. 3ence, an
important focus of our monetary policy in this period was $ and still is $ to repair the monetary
transmission mechanism. 4stablishing a precise lin" between these impairments and
unemployment performance is not straightforward. 3oweer, 456 staff estimates of the 7credit
gap8 for stressed countries $ the difference between the actual and normal olumes of credit in the
absence of crisis effects $ suggest that that credit supply conditions are e.erting a significant drag
on economic actiity.
(2)
Cyclical and structural factors
5yclical factors hae therefore certainly contributed to the rise in unemployment. +nd the
economic situation in the euro area suggests they are still playing a role. !he most recent 92:
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data confirm that the recovery in the euro area remains uniformly weak, with subdued wage growth
even in non-stressed countries suggesting lacklustre demand. In these circumstances, it seems
likely that uncertainty over the strength of the recovery is weighing on business investment and
slowing the rate at which workers are being rehired.
That being said, there are signs that, in some countries at least, a significant share of
unemployment is also structural.
For example, the euro area Beveridge curve which summarises unemployment developments at
a given level of labour demand !or vacancies" suggests the emergence of a structural mismatch
across euro area labour markets !Figure #". In the first phase of the crisis strong declines in labour
demand resulted in a steep rise in euro area unemployment, with a movement down along the
Beveridge curve. The second recessionary episode, however, led to a further strong increase in
the unemployment rate even though aggregate vacancy rates showed marked signs of
improvement. This may imply a more permanent outward shift.
Figure 3: Evolution of the euro area Beveridge curve over the crisis
$art of the explanation for the movement of the Beveridge curve seems to be the sheer magnitude
of the %ob destruction in some countries, which has led to reduced %ob-finding rates, extended
durations of unemployment spells and a higher share of long-term unemployment. This reflects, in
particular, the strong sectoral downsi&ing of the previously overblown construction sector !Figure
'", which, consistent with experience in the (), tends to lower match efficiency.
*#+
By the end of
,-.#, the stock of long-term unemployed !those unemployed for a year or more" accounted for
over /0 of the total euro area labour force more than double the pre-crisis level.
Figure 4: Evolution of euro area employment by sector and educational level
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Another important explanation seems to be a lack of redeployment opportunities for displaced low-
skilled workers, as evidenced by the growing disparity between the skills of the labour force and
the skills required by employers. Analysis of the evolution of skill mismatch
[4
suggests a notable
increase in mismatch at regional, country and euro area level !"igure #$. As the previous figure
shows, employment losses in the euro area are strongly concentrated among low skilled workers
Figure 5: Skill mismatch indices for the euro area
All in all, estimates provided by international organisations % in particular, the &uropean
'ommission, the (&') and the *+" % suggest that the crisis has resulted in an increase in
structural unemployment across the euro area, rising from an average !across the three
institutions$ of ,.,- in .//, to 0/.1- by ./01.
[#
Nuancing the picture
2here are nevertheless two important qualifications to make here.
2he first is that estimates of structural unemployment are surrounded by considerable uncertainty,
in particular in real time. "or example, research by the &uropean 'ommission suggests that
estimates of the 3on-Accelerating 4age 5ate of 6nemployment !3A456$ in the current situation
are likely to overstate the magnitude of unemployment linked to structural factors, notably in the
countries most severely hit by the crisis.
[7
2he second qualification is that behind the aggregate data lies a very heterogeneous picture. 2he
current unemployment rate in the euro area of 00.#- is the !weighted$ average of unemployment
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rates close to 5% in Germany and 25% in Spain. Structural developments also differ: analysis of
the Beveridge curve at the country level reveals, for example, a pronounced inward shift in
Germany, whereas in rance, !taly and in particular Spain, the curves move outward.
"his heterogeneity reflects different initial conditions, such as varying sectoral compositions of
employment #in particular the share employed in construction$, as well as the fact that
unemployment rates have historically %een persistently higher in some euro area countries than
others.
&'(
But it also reflects the relationship %etween la%our mar)et institutions and the impact of
shoc)s on employment.
&*(
"he economies that have weathered the crisis %est in terms of
employment tend also to %e those with more flexi%ility in the la%our mar)et to ad+ust to economic
conditions.
!n Germany, for example, the inward shift in the Beveridge curve seen over the course of the crisis
follows a trend that %egan in the mid,2---s after the introduction of the .art/ la%our mar)et
reforms. !ts relatively stronger employment performance was also lin)ed to the fact that German
firms had instruments availa%le to reduce employees0 wor)ing time at reasona%le costs 1 i.e. the
intensive margin 1 including reducing overtime hours, greater wor)ing time flexi%ility at the firm
level, and extensive use of short,time wor) schemes.
&2(
3ven within the group of countries that experienced the sovereign de%t crisis most acutely, we can
see a differential impact of la%our mar)et institutions on employment. !reland and Spain, for
example, %oth experienced a large destruction of employment in the construction sector after the
4ehman shoc), %ut fared 5uite differently during the sovereign de%t crisis. 6nemployment in
!reland sta%ilised and then fell, whereas in Spain it increased until 7anuary 2-89 #igure :$. rom
2-88 to 2-89 structural unemployment is estimated to have risen %y around -.5 percentages
points in !reland, whereas it increased %y more than 2.5 percentages points in Spain.
&8-(
"his diverging performance can in part %e accounted for %y differences in net migration. But it also
reflects the fact that !reland entered the crisis with a relatively flexi%le la%our mar)et and adopted
further la%our mar)et reforms under its 36,!; programme %eginning in <ovem%er 2-8-. Spain,
on the other hand, entered the crisis with strong la%our mar)et rigidities and reform only started
meaningfully in 2-82.
!mportantly, until then, the capacity of firms to ad+ust to the new economic conditions was
hampered in Spain %y sectoral and regional collective %argaining agreements and wage
indexation. Survey evidence indicates that Spain was among the countries where indexation was
more fre5uent 1 covering a%out '-% of firms.
&88(
=s a result, as igure : shows, nominal
compensation per employee continued to rise in Spain until the third 5uarter of 2-88, despite a
more than 82 percentage point increase in unemployment in that time. !n !reland, %y contrast,
downward wage ad+ustment %egan already in the fourth 5uarter of 2--* and proceeded more
5uic)ly.
"he upshot was that, whereas the !rish la%our mar)et facilitated some ad+ustment through prices,
the Spanish la%our mar)et ad+usted primarily through 5uantities: firms were forced to reduce la%our
costs %y reducing employment. =nd due to a high degree of duality in the Spanish la%our mar)et,
this %urden of ad+ustment was concentrated in particular on a less protected group 1 those on
temporary contracts. "hese had %een particularly prevalent in Spain in advance of the crisis,
accounting for around one third of all employment contracts.
&82(
!n Spain, as in other stressed countries, a num%er of these la%our mar)et rigidities have since
%een addressed through structural reforms with positive effects. or example, the >3?@ estimates
that the 2-82 la%our mar)et reform in Spain has improved transitions out of unemployment and
into employment at all unemployment durations.
&89(
Figure 6: Unemployment and nominal compensation developments in Ireland and Spain
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To sum up, unemployment in the euro area is characterised by relatively complex interactions.
There have been differentiated demand shocks across countries. These shocks have interacted
with initial conditions and national labour market institutions in different ways and the interactions
have changed as new reforms have been adopted. Consequently, estimates of the degree of
cyclical and structural unemployment have to be made with quite some caution. But it is clear that
such heterogeneity in labour market institutions is a source of fragility for the monetary union.
2. Responding to high unemployment
o what conclusions can we draw from this as policymakers! The only conclusion we can safely
draw, in my view, is that we need action on both sides of the economy" aggregate demand policies
have to be accompanied by national structural policies.
#emand side policies are not only $ustified by the significant cyclical component in unemployment.
They are also relevant because, given prevailing uncertainty, they help insure against the risk that
a weak economy is contributing to hysteresis effects. %ndeed, while in normal conditions
uncertainty would imply a higher degree of caution for fear of over&shooting, at present the
situation is different. The risks of 'doing too little( i.e. that cyclical unemployment becomes
structural outweigh those of 'doing too much( that is, excessive upward wage and price
pressures.
)t the same time, such aggregate demand policies will ultimately not be effective without action in
parallel on the supply side. *ike all advanced economies, we are operating in a set of initial
conditions determined by the last financial cycle, which include low inflation, low interest rates and
a large debt overhang in the private and public sectors. %n such circumstances, due to the +ero
lower bound constraint, there is a real risk that monetary policy loses some effectiveness in
generating aggregate demand. The debt overhang also inevitably reduces fiscal space.
%n this context, engineering a higher level and trend of potential growth and thereby also
government income can help recover a margin for manoeuvre and allow both policies regain
traction over the economic cycle. ,educing structural unemployment and raising labour
participation is a key part of that. This is also particularly relevant for the euro area as, to list $ust
one channel, higher unemployment in certain countries could lead to elevated loan losses, less
resilient banks and hence a more fragmented transmission of monetary policy.
Boosting aggregate demand
-n the demand side, monetary policy can and should play a central role, which currently means an
accommodative monetary policy for an extended period of time. % am confident that the package of
measures we announced in .une will indeed provide the intended boost to demand, and we stand
ready to ad$ust our policy stance further.
/e have already seen exchange rate movements that should support both aggregate demand and
inflation, which we expect to be sustained by the diverging expected paths of policy in the 0 and
the euro area 12igure 34. /e will launch our first Targeted *ong&Term ,efinancing -peration in
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September, which has so far garnered significant interest from banks. And our preparation for
outright purchases in asset-backed security (ABS) markets is fast moving forward and we expect
that it shoud contribute to further credit easing. !ndeed, such outright purchases woud
meaningfuy contribute to diversifying the channes for us to generate i"uidity.
Figure 7: Expected real interest rate path in the euro area and the US
!nfation has been on a downward path from around #.$% in the summer of #&'# to &.(% most
recenty. ! comment on these movements about once a month in the press conference and ! have
given severa reasons for this downward path in infation, saying it is because of food and energy
price decines) because after mid-#&'# it is mosty exchange rate appreciation that has impacted
on price movements) more recenty we have had the *ussia-+kraine geopoitica risks which wi
aso exert a negative impact on the euro area economy) and of course we had the reative price
ad,ustment that had to happen in the stressed countries as we as high unempoyment.
! have said in principe most of these effects shoud in the end wash out because most of them are
temporary in nature - though not a of them. But ! aso said if this period of ow infation were to ast
for a proonged period of time the risk to price stabiity woud increase.
-ver the month of August financia markets have indicated that infation expectations exhibited
significant decines at a hori.ons. /he $year0$year swap rate decined by '$ basis points to ,ust
beow #% - this is the metric that we usuay use for defining medium term infation.
But if we go to shorter and medium-term hori.ons the revisions have been even more significant.
/he rea rates on the short and medium term have gone up, on the ong term they haven1t gone up
because we are witnessing a decine in ong term nomina rates, not ony in the euro area but
everywhere reay. /he 2overning 3ounci wi acknowedge these deveopments and within its
mandate wi use a the avaiabe instruments needed to ensure price stabiity over the medium
term.
/urning to fisca poicy, since #&'& the euro area has suffered from fisca poicy being ess
avaiabe and effective, especiay compared with other arge advanced economies. /his is not so
much a conse"uence of high initia debt ratios 4 pubic debt is in aggregate not higher in the euro
area than in the +S or 5apan. !t refects the fact that the centra bank in those countries coud act
and has acted as a backstop for government funding. /his is an important reason why markets
spared their fisca authorities the oss of confidence that constrained many euro area governments6
market access. /his has in turn aowed fisca consoidation in the +S and 5apan to be more
backoaded.
/hus, it woud be hepfu for the overa stance of poicy if fisca poicy coud pay a greater roe
aongside monetary poicy, and ! beieve there is scope for this, whie taking into account our
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specific initial conditions and legal constraints. These initial conditions include levels of government
expenditure and taxation in the euro area that are, in relation to GDP, already among the highest in
the world. And we are operating within a set of fiscal rules the Staility and Growth Pact which
acts as an anchor for confidence and that would e self!defeating to rea".
#et me in this context emphasise four elements.
$irst, the existing flexiility within the rules could e used to etter address the wea" recovery and
to ma"e room for the cost of needed structural reforms.
Second, there is leeway to achieve a more growth!friendly composition of fiscal policies. As a start,
it should e possile to lower the tax urden in a udget!neutral way.
%&'(
This strategy could have
positive effects even in the short!term if taxes are lowered in those areas where the short!term
fiscal multiplier is higher, and expenditures cut in unproductive areas where the multiplier is
lower. )esearch suggests positive second!round effects on usiness confidence and private
investment could also e achieved in the short!term.
%&*(
Third, in parallel it may e useful to have a discussion on the overall fiscal stance of the euro area.
+nli"e in other ma,or advanced economies, our fiscal stance is not ased on a single udget voted
for y a single parliament, ut on the aggregation of eighteen national udgets and the -+ udget.
Stronger coordination among the different national fiscal stances should in principle allow us to
achieve a more growth!friendly overall fiscal stance for the euro area.
$ourth, complementary action at the -+ level would also seem to e necessary to ensure oth an
appropriate aggregate position and a large pulic investment programme which is consistent with
proposals y the incoming President of the -uropean .ommission.
%&/(
Reforming structural policies
0o amount of fiscal or monetary accommodation, however, can compensate for the necessary
structural reforms in the euro area. As 1 said, structural unemployment was already estimated to e
very high coming into the crisis 2around 345. 1ndeed, some research suggests it has een high
since the &367s.
%&6(
And given the interactions 1 descried, there are important reasons why
national structural reforms that tac"le this prolem can no longer e delayed.
This reform agenda spans laour mar"ets, product mar"ets and actions to improve the usiness
environment. 1 will however focus here on laour mar"ets, where there are two cross!cutting
themes that 1 see as a priority.
The first is policies that allow wor"ers to redeploy 8uic"ly to new ,o opportunities and hence lower
unemployment duration. Such policies include enaling firm!level agreements that allow wages to
etter reflect local laour mar"et conditions and productivity developments9 allowing for greater
wage differentiation across wor"ers and etween sectors9 reductions in employment ad,ustment
rigidities and especially laour mar"et dualities9 and product mar"et reforms which help to speed
up the reallocation of resources and employment to more productive sectors.
The second theme is raising the s"ill intensity of the wor"force. :e have already seen the
disproportionate effect of the crisis on low s"illed wor"ers, which implies a period of re!s"illing will
e necessary to get people ac" into wor". The longer!term effects of high youth unemployment
also point to this conclusion. The numer of unemployed aged etween &* and ;', relative to the
laour force of the same age group, increased from an already high level of around &*4 in ;776 to
;'4 in ;7&<. This has most li"ely left significant =scarring> as the young have lost access to a
crucial step of on!the!,o training.
The issue of s"ill intensity is also very relevant for potential growth. :hile raising laour
participation is crucial, demographic prospects imply that it will provide a diminishing contriution to
future potential. #ifting trend growth will have to come mainly through raising laour productivity.
Thus, we need to ensure that, to the extent possile, employment is concentrated in high!value
added, high!productivity sectors, which in turn is a function of s"ills.
:hat is more, in the gloal economy the euro area cannot compete on costs alone with emerging
countries, if only ecause of our social model. ?ur comparative advantage therefore has to come
from comining cost competitiveness with specialisation in high!value added activities a usiness
model that countries such as Germany have successfully demonstrated. Seen from this
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perspective, insufficient skill levels will effectively raise the non-accelerating inflation rate of
unemployment (NAIRU) by causing more workers to rop out of the !competitiveness "one# an
become unemployable$
Raising skills is clearly first an foremost about eucation, where there is much that coul still be
one$ %he percentage of the working age population that has complete upper seconary or
tertiary eucation in the euro area ranges from a high of more than &'( in some countries to a low
of aroun )'( in others$ *ut there is also an important role for active labour market policies, such
as lifelong learning, an for eraicating istortions such labour market uality$ %he latter woul,
among other things, help reuce inefficient worker turnover an increase incentives for employers
an employees to invest in eveloping +ob-specific skills$
3. Conclusion
,et me conclue$
Unemployment in the euro area is a comple- phenomenon, but the solution is not overly
complicate to unerstan$ A coherent strategy to reuce unemployment has to involve both
eman an supply sie policies, at both the euro area an the national levels$ An only if the
strategy is truly coherent can it be successful$
.ithout higher aggregate eman, we risk higher structural unemployment, an governments that
introuce structural reforms coul en up running +ust to stan still$ *ut without etermine
structural reforms, aggregate eman measures will /uickly run out of steam an may ultimately
become less effective$ %he way back to higher employment, in other wors, is a policy mi- that
combines monetary, fiscal an structural measures at the union level an at the national level$ %his
will allow each member of our union to achieve a sustainably high level of employment$
.e shoul not forget that the stakes for our monetary union are high$ It is not unusual to have
regional isparities in unemployment within countries, but the euro area is not a formal political
union an hence oes not have permanent mechanisms to share risk, namely through fiscal
transfers$
0123
4ross-country migration flows are relatively small an are unlikely to ever become a
key river of labour market a+ustment after large shocks$
01&3
%hus, the long-term cohesion of the euro area epens on each country in the union achieving a
sustainably high level of employment$ An given the very high costs if the cohesion of the union is
threatene, all countries shoul have an interest in achieving this$
555
%he te-t has been upate to reflect new comments on inflation mae uring elivery$
555
013
It is important to note, however, that the ifference in euro area unemployment evelopments
relative to the U6 also reflects very ifferent evelopments in labour market participation$ 7ver the
perio 8'1'-18, the ecline in the participation rate contribute significantly to the fall in the
unemployment rate in the U6$ At the same time, the rising participation rate in the euro area
e-plains part of the rise in the unemployment rate$ Assuming that, in both the U6 an the euro
area, the labour force participation ratios ha remaine unchange compare with 8''9 an that
the ifference to the actual ratios ha been fully reflecte in the number of unemploye, the U6
unemployment rate in 8'18 woul have been higher than that of the euro area$ :or more
information see *o- 9 in the ;4* <onthly *ulletin, August 8'1=$
083
%he >creit gap? is compute as the ifference between the actual an the counterfactual path of
the total creit to non-financial corporations simulate by using the multi-country *@AR of Altavilla
et al$ (8'1))$ <ore precisely, the counterfactual path has been obtaine by measuring the stock of
loans consistent with pre-crisis past business cycle regularities in absence of financial friction for
the banking system$ :or further etails see Altavilla, 4arlo, Aomenico Biannone an <ichele
,en"a (8'1))$ C%he :inancial an <acroeconomic ;ffects of the 7<% Announcements,C ;4*
.orking Daper No$19'9$
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[3]
U.S. industry-level studies find that a large part of the decline in match efficiency is driven by the
low level of job openings and hires per vacancy in the construction sectorsee e.g. arnichon!
"egis! #ichael $. %. &lsby! art 'obijn and (y)eg*l +ahin ,-./-0 1$hich 2ndustries are Shifting
the everidge 3urve45 #onthly %abor "eview! 6une -./-! -7-389 :avis! Steven 6.! ". 6ason
;aberman! and 6ohn 3. 'altiwanger ,-./-0 1"ecruiting 2ntensity during and after the <reat
"ecession= >ational and 2ndustry &vidence!? (merican &conomic "eview= @apers and
@roceedings.
[A]
ased on sBill mismatch indeCes computed as the difference between sBill demand ,proCied by
educational attainments of the employed0 and sBill supply ,proCied by the educational attainments
of the labour force or unemployed! respectively0. See ,forthcoming0 &3 Dccasional @aper entitled
13omparisons and contrasts of the impact of the crisis on euro area labour marBetsEE.
[7]
2n terms of calculating structural unemployment! the &uropean 3ommission estimates a >($"U
while D&3: estimates the >(2"U using a filter techniFue that seeBs to disentangle movements in
the unemployment rates into a structural and a cyclical component! on the basis of a @hillips-curve
relationship. Ghe estimates by the 2#; are not based on any 1official? method H meaning that they
do not publish a model or a given methodology! since their internal estimates are subject to
judgement.
[I]
&uropean 3ommission! 1%abour #arBet :evelopments in &urope -./3?! &uropean &conomy
IJ-./3.
[8]
2n the short pre-crisis period between /KK7 and -..8! for which we have homogeneous euro
area data! average unemployment rates were around KL in ;rance and 2taly! but above /AL in
Spain. 2n <ermany! the unemployment rate was also KL! but only as a result of a large! previous
increase following reunification.
[M]
lanchard! Dlivier! and 6ustin $olfers ,/KKK0! 1Ghe "ole of ShocBs and 2nstitutions in the "ise of
&uropean Unemployment= the (ggregate &vidence?! >&" $orBing @aper 8-M-.
[K]
See urda! #ichael 3.! and 6ennifer 'unt ,-.//0! 1$hat &Cplains the <erman %abour #arBet
#iracle in the <reat "ecession?! >&" $orBing @aper >o. /8/M89 and renBe! Narl! Ulf "inne and
Nlaus ;. Oimmermann ,-./30! 1Short-time worB= Ghe <erman answer to the <reat "ecession?!
2nternational %abour "eview Pol. /7-! 2ssue -.
[/.]
(verage of &uropean 3ommission! D&3: and 2#; estimates.
[//]
&uropean 3entral anB ,-./.0! $age :ynamics in &urope= ;inal "eport of the $age :ynamics
>etworB ,$:>0! &uropean 3entral anB.
[/-]
See D&3: &mployment DutlooB ,-./-0! 1'ow :oes Spain 3ompare4?.
[/3]
D&3:! 1Ghe -./- %abour #arBet "eform in Spain= a @reliminary (ssessment?! :ecember -./3.
[/A]
Ghe recommendations for the euro area adopted in the conteCt of the -./A &uropean Semester
eCplicitly call on the &urogroup to eCplore ways to reduce the high taC wedge on labour.
[/7]
(lesina! (lberto! 3arlo ;avero and ;rancesco <iavaQQi ,-./A0! 1Ghe output effect of fiscal
consolidation plans?! mimeo! #ay -./A.
[/I]
Ghe incoming &uropean 3ommission @resident! 6ean-3laude 6uncBer! has proposed a R3..
billion public-private investment programme to help incentivise private investment in the &U
economy.
[/8]
lanchard! Dlivier! ,-..I0! 1&uropean unemployment?! &conomic @olicy! pp. 7-7K.
[/M]
3ross-country transfers between euro area countries eCist as part of the &U cohesion policy.
Ghese funds are however in principle temporary! as they designed to support the 1catching-up?
process in lower income countries.
Pagina 10 di 11 ECB: Unemployment in the euro area
26/08/2014 http://wwwe!"europaeu/pre##/$ey/date/2014/html/#p140822enhtml