EU Commission Predicts Relatively Jobless Recovery


The US isn't the only economy which may experience job creation problems during the year ahead.

More Europeans are likely to lose their jobs in the months ahead even though the economy is expected to recover, the European Union Commission warned Thursday. The EU's statistical office reported the euro-zone economy shrank by 0.1 percent in the second quarter due to slowing consumer spending and decreasing investments and exports. That decline follows two stagnant quarters in a row in the 12 euro-using countries, Eurostat said.

The European Commission issued new predictions for recovery, expecting flat to 0.4 percent growth in the third quarter and 0.2 percent to 0.6 percent growth in the fourth quarter. But it said more European workers are likely to lose their jobs despite the expected improvement. "There may not be much scope" for preventing lay-offs by cutting working hours, the EU said in its 2003 employment report, issued Thursday. It gave no firm predictions of jobless levels. Until now, layoffs in the bloc have been relatively modest, despite the economy's sluggishness. In the 15 EU members, unemployment stands at 8 percent, compared with 7.7 percent in August 2002.


Many economists attribute this to tough labor laws that make it more difficult for European employers to cut jobs than it is for their U.S. competitors. The Commission also pointed to increased availability of new types of job contracts. About 18 percent of European employees work part-time and 13 percent have temporary jobs. In the past few years, EU industries have cut working hours and produced less with the same number of workers, at the expense of productivity. But the Commission warns these techniques may no longer may be sustainable.


"For the EU as a whole there may not be much scope for containing the impact of the slowdown through further reductions in working hours. Also, the decline in productivity growth cannot continue unchecked for much longer," the report said. The second-quarter fall in gross domestic product was most pronounced in the Netherlands, which contracted 0.6 percent. France was down 0.3 percent, followed by Germany, Italy and Belgium, each with 0.1 percent declines. Spain had the highest growth rate at 0.7 percent, according to Eurostat. The statistical office cited slowing growth in household consumption and a drop in investments and exports. For the EU as a whole, including Britain, Denmark and Sweden, GDP was flat for the second quarter in a row.
Source: Yahoo News
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