The 2007-2009 recession took an enormous toll on the labor market. We believe that this drag and the realization by employers that they can do with “less” when it comes to their number of employees leads us to believe that a vibrant economy is still in the distant future.
“Long-term unemployment increasingly plagues Europe and America as more than a third of unemployed people in rich countries have been out of work for over a year. Since the financial crisis began the number of long-term unemployed people has doubled to almost 17MM, according to data from the OECD, a think-tank. In Spain a staggering 3MM people have been out of work for more than 12 months, about the same number as in America, whose labor force is considerably larger. The problem can be self-sustaining. Skills deteriorate when they are not used; the jobless become discouraged and employers are less inclined to hire them. Yet a few European countries have seen a decline in long-term joblessness. In Germany, an economic recovery and labor-market reforms means that there are almost 1MM fewer people out of work now than at the end of 2007. And Switzerland, where the jobless rate barely edged above 4%, found work for those lingering on the dole. For most OECD countries, however, the high and growing proportion of long-term unemployed is a threat to their economic growth.”