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16/07/2012Job fortunes reveal a wide gulf between the winners and losers in Europe

The labour market in Germany is in far better shape than many other European Union member states, whilst the labour markets in Spain and Poland remain very weak.

According to the latest labour market index figures from the Federation of European Employers (FedEE) Germany's labour market has greatly outperformed that of its closest rivals since January 2010. Moreover, all selected labour markets, apart from Germany, continue to perform less well than a year ago.

The UK was the only country to register an increase (3.1%) in the FedEE index in May 2012 compared with the previous month. The largest decline appeared in the Netherlands (8.1%) followed by Germany, Spain and Poland, where the index decreased by 3.8%, 1.2% and 0.9%, respectively.

Year-on-year growth rates reveal a more dramatic situation. Labour market dynamics deteriorated substantially in Spain, Poland and the Netherlands, where the index in May 2012 rose by 54.4%, 34.4% and 28.3%, respectively, compared to May 2011. A decrease was also evident in the UK (11.6%) whereas the German index grew by 7.4%. Overall, the EU27 index dropped by 11.2% from May 2011 to May 2012.

The movements of vacancy and unemployment rates and real labour costs per unit of output over the last year reveal wide variations between countries. In Germany there has been a positive year-on-year growth in the vacancy/unemployment ratio (+11.4%), whereas Spain (-45.9%) and Poland (-35.4%) have suffered substantial negative movements. Overall, the EU-average decline in the ratio of vacancies to unemployment was -7.7%. By contrast, labour costs increased on all countries analysed - and particularly in Germany (+3.6%), Poland (+2.3%) and Spain (+2.1%). However, production fell in Spain by 6.3%, by 1.7% in the Netherlands and by 1.6% in the UK.

Speaking at the release of the latest index figures today, Robin Chater, Secretary-General of The Federation of European Employers (FedEE) said that "The conception of the European Union as a Common Market is now well and truly dead. Cracks are opening up throughout the EU between eastern and western nations, big and small countries, the eurozone and EU countries outside it and well managed economies like Germany and badly managed economies like Spain and Poland. EU politicians need to take a long look at recent trends and decide how the EU model of financial regulation, free movement and political checks and balances needs to change. "

"My view is that the EU experiment has been a fundamental mistake because it was conceived as a top-down solution to maintain the peace in the post-war years. Whereas a successful economic system should be built from the bottom-up - by involving people as much as possible in local economies. Big can be beautiful - but only if made up from the finest component parts."

FedEE Index
The FedEE Index measures the degree of health of an economy by analysing the relationship between labour supply and demand, adjusted by real labour costs per unit of output, conventionally used as an indicator of economic competitiveness. In order to construct our index, we have used data for the rate of vacancies, the rate of unemployment, the production index, the total nominal labour costs and the harmonised consumer price index.

The index is based on Eurostat monthly data and FedEE estimates for all the European Union's 27 member states from January 2010 onwards.


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