Enlist small companies to fight EU unemployment

The European Policy Centre (EPC) recently published an outlook on the 2013 economic prospects. Among the points made by the different contributors, that of the OECD‘s Deputy Secretary-General and Chief Economist–Pier Carlo Padoan–is of main interest. He believes that Europe will slowly emerge from the recession during this year; however, the OECD’s forecast is that unemployment will rise.

In light of the recent unemployment rates released by Eurostat, which in December was “stabilized” at 11.7%, this is a most worrying statement. In addition, the report makes a point out of the high youth unemployment in the EU, which grew since December 2011 from 22.2% to 23.4%.

In the same lines, the EPC also published a policy paper on unemployment, but this time regarding the “older work force”–Creating Second Career Labour Markets – Towards more Employment Opportunities for Older Workers. I highly recommend reading it, as its analysis and policy recommendations are accurate, considering the issue at hand. One of the main aspects of the paper is the (re)integration of older workers in the labour market, which at present might be out of their comfort zone due to the change towards a service and knowledge based economy; and which is reluctant to integrate older workers, practising an under-the-table ageism.

Combining the two issues of young and old unemployment results in a fairly grim picture. Youth unemployment is rising, older workers which have been laid off are finding it difficult to reintegrate in the work force, leaving us with a middle aged population which has to support both. If we also consider that the EU population is ageing faster than 20 years ago, and that the median age of the population across the EU is rising every year while birth rates go down, well, then the picture becomes even grimmer.

Once again diversity of the economic activities has to be emphasized. This has been a concern for economic growth strategists for some time now. The “sudden death” of one economic giant in certain regions created major spikes in unemployment. This is a(nother) sign that reliance on major companies to produce and sustain jobs on their own is counter-productive. Diversity should be encouraged where possible, and incentives for other smaller services and side products should also be implemented.

Building the argument around economic clusters, this would ensure two things: the major business (i.e. major employer) would feel some relief and support, while the smaller businesses would be able to prolong the life span of the economic cluster.

And in case of need the smaller businesses would be able to create a number of jobs aimed at (leastwise partially) alleviating the effects of personnel reductions of larger businesses and reintegrate some of the experienced work force.

In addition, stakeholders have to change their behaviour; both employees and employers need to look at each other in a different perspective and understand each other. At present there is no middle ground between employers and young people and employers and older people. There are certain expectations from one another in an employer-employee relationship. These expectations have to be addressed and understood by both parties, and conciliation needs to be encouraged. This is a basic principle in addressing social inclusion.