By the early 1980s the unemployment rates in the United States and Europe had broadly converged. Since then the unemployment rate in the United States has been below the average for the European Union. Despite recording a measure of decline last year, the euro area unemployment rate remained at 10.8% in December, more than double the corresponding rate in the United States.
However, some European countries, particularly those with more flexible labour markets, have managed to avoid the trend of everrising unemployment. For example, the Netherlands, Ireland, Portugal, Austria and Luxembourg at present have unemployment rates well below the euro area average. If one examines the duration of unemployment, it is immediately apparent that Europe’s problem is principally one of long-term unemployment.