Employment rates and economic growth are set to remain sluggish in the eurozone over the next two years but protectionism is not the answer to the challenges of globalisation, according to a major new study by the Organisation for Economic Cooperation and Development (OECD) published on Tuesday (28 June).
The report predicts that 14.8 million people will be out of a job in the EU's 15 original member states by 2006, compared to 15.1 million in 2005, with the average jobless rate creeping down from 8.2 percent to 8.0 percent over the same period.
At the same time, the region's economy will grow by 2.1 percent in 2006 compared to just 1.4 percent this year.
Looking at specific countries, the report shows that between 8 and 10 percent of people are set to stay out of work in France, Germany, Italy and Spain in the near future, while France, Germany and Italy are set to post the lowest economic growth at just 1.1-2.0 percent.
The study linked the poor outlook for jobs in the OECD region, which also includes other EU countries such as the UK and Poland as well as the US, Japan and Australia, to the challenges of globalisation and EU enlargement as well as high oil costs.
Labour costs in India and China are up to 20 times lower than in the eurozone, and up to four times lower in new member states such as the Czech Republic, with the new economy endangering workers and causing downward wage pressure in both the manufacturing and service-related sectors.
Spectre of job losses will hit white collar workers
"The spectre of job losses is not confined mainly to blue-collar workers but could also hit many white collar workers too", the OECD's director for employment John Martin said in a statement accompanying the findings.
But Mr Martin urged developed nations to embrace the new global economy.
"Only a fraction of job losses recorded in OECD countries is likely to be directly attributable to trade and investment liberalisation", the director noted.
"Past experience also shows that protectionist policies are a blind alley: countries that have been more open to trade have also tended to experience higher economic growth than less open economies", he added.
Study echoes EU budget debate
The Paris-based OECD's conclusions seem to dovetail with the current debate on EU financing and Europe's internal market.
In recent weeks, France has argued that the EU should maintain high levels of subsidies to farm workers and that old member states should be able to protect themselves from an influx of cheap service providers from eastern Europe.
On the other side, the UK has championed the so-called 'Atlanticist' or 'Anglo-Saxon' view that more EU cash should be spent on research and development.
Eastern Europe catching up
The most startling OECD figures came out of eastern Europe with countries such as Poland struggling with high jobless rates but racing to catch up with the EU 15.
Unemployment will fall from 18.2 percent to 17.3 percent in Poland next year, while the country's economy will grow 4.5 percent the study predicts.
Slovakia will have the highest unemployment out of the whole OECD zone on 17.5 percent as well as the fastest economic growth in the EU with 5.7 percent.
By: N. Peter Kramer
