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.
According to OECD figures, around half of the unemployed of the European Union have been out of work for at least a year, while in the United States under 10% of the unemployed have been without work for this long. This suggests that in Europe there is an urgent need to improve incentives aimed at getting the long-term unemployed back to work.