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Monday, June 19, 2006

EU Unemployed Youth

Back to the economic status of Europe.

TCS's article by Johnny Munkhammar reports the youth unemployment statistics in Europe. Greece, Italy, Sweden, France, Belgium and Finland have youth unemployment at over 20%. Poland leads the way with 33% youth unemployment.

A large number of unemplyed young people cannot be good for a country. Munkhammar sees a correlation between statist countries and the unemployment. Central planners cannot react quickly enough to dynamic market changes. Also, creative destruction recognizes that businesses and methods may become quickly obsolete as competitors sell more cheaply for profit and consumers find new needs. (I have just discovered how cheap iPods are. How can I go much further without a 2 meg iPod at the cost of less than $200?).

Munkhammar writes:

Young people are the first and biggest losers from policies designed to stop change. Indeed a big state is in itself an obstacle to change, because by definition the state is centrally planned and inflexible. But regulations in the labor market -- minimum wages, privileges for trade unions, obstacles to hiring or firing -- may have the most serious negative effects.

There are naturally many factors affecting whether young people get jobs. But a look at the Economic Freedom in the World index confirms that countries with high youth unemployment also have regulated labor markets. Denmark, Ireland and the Netherlands have rather free labor markets and the lowest levels of youth unemployment in the EU.

The empirical proof is constantly provided. Is there anybody out there?

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