But when exploring avenues to make labour markets more flexible and efficient, we might heed the advice of the Nobel-winning labour economist Chris Pissarides: “Protect workers, not jobs.” In other words, less stringent employment protection coupled with adequate financial support in the event of a job loss is likely to reduce overall unemployment, while still insuring workers against the vagaries of the market.
The crushingly high unemployment levels – and especially youth unemployment levels – in some countries such as Spain are really a tragedy. These unemployment levels are more than enough reasons on their own to improve the workings of the respective labour markets. The spectre of a “lost generation” is economically indefensible and morally repulsive.