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The real unemployment rate and Europe's underground economy

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Luke MacGregor/Reuters

(Read caption) Demonstrators protest against job cuts in central London. Many of the demonstrators had marched from Jarrow in north east England, recreating a 1936 protest march against unemployment. While the official unemployment figures in some European countries are higher than in the US, the actual unemployment numbers are much lower because of the region's thriving black market economy.

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So when we heard while I was in Spain last last week with my graduate students that the official unemployment rate there was 20% my immediate question was, "So high is the actual unemployment rate?"

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"Oh, it is much lower than 20%," was the answer we heard.

What? Lower?

"Yes.  We have a large black market that does not get factored in with our employment data.  Many who are officially unemployed as working in the underground economy for cash," the economic expert we heard from explained to us.



"By 2020, the OECD projects, two-thirds of the workers of the world will be employed in System D. There's no multinational, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D."


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So perhaps help is already on its way for our economy. 
Let's just hope that as government tries to do more and more to "fix" the economy that their level of incompetence grows with each new economic initiative they throw at us.