European Labour Market Essay Example | Topics and Well Written Essays - 4000 words

European Labour Market - Essay Example The empirically based studies concentrate on the evolutionary models or on management literature which emphasize on the price competitiveness and the shares of the export market as an important tool in the investigation of the contribution of the strategies induced in the balancing of the costs and productivity (Aiginger, 2004). The paper will focus on different aspects of the unemployment of the Sweden and various policy implications from 1970s till date with the help of various economic theories. Unemployment in Europe from the decades of 1970s The sharp decline in the unemployment increased drastically across the globe with the crash of the Bretton Woods system of fixed exchange rates. But unlike many areas of the world, unemployment in several European countries has never returned back to the low levels during the Golden Age after the Second World War. The unemployment in the European Union is a major problem. The Euro zone members encountered high levels of unemployment rates an d it increased rapidly in the early 1970s in parallel to the consolidation of an integrated economy and its size and the complexity has been approaching as that of the USA which presents a sharp contrast (Nixson & Artis, 2007, p. 354). The hardcore explanation which stands in this way is that the growth of the industrialized economies became much more unstable and became vulnerable to frequent shocks which include oil price shocks or the exchange rate fluctuations from the period of 1970 onwards. The countries with the flexible labor market rules such as modest unemployment benefits, light employment protection legislation and a low degree of union power which are used in the management of the absorption of these shocks with a much accelerated pace with the comparison to other rigid institutions . The enhancement in the number of the unemployed in Europe can be attributed to the interaction between shocks and institutions. But it has also been encountered often that extensive unempl oyment benefits generate the problem of moral hazard where the workers receive fractional protection against unemployment and they are less likely to search jobs. People studded with strong work ethics will be finding it difficult to rely on the benefits without actively looking out for jobs while the others try to remain on the benefits as long as possible. Therefore the average values in a country have an impact on the size of the moral hazard problem and hence on the cost of providing generous unemployment benefits. Expectations will be on the countries where the workers generally posses a weaker work ethic in order to have a lower ‘replacement ratio’ which is the level of benefits relative to wages (Michau, 2009, p. 14). The employment rate is the number of the total employed and the self employed population of the working age. In the early 1960s the EU 15 the employment ratio was higher than that of the USA but it fell in the 1970s but picked up pace in the 1990 wi th falling sharply with the recession of 2008-2009 (Â  El-Agraa, 2011 p.373). In recent years defenders of the European social model proposed that capitalism augmented by a generous and interventionist welfare state which have taken the praising to Scandinavia to a sky rocketed level. The Nordic