Real unemployment in both the Eurozone (EU) and the US is the main brake and embankment for expected growth in the US and Eurozone economies, respectively. The figures for official unemployment are a subset of the magnitudes of real unemployment and given that real unemployment is much higher than official unemployment.
by Trust Economics-https://trusteconomics.eu
©The law of intellectual property is prohibited in any way unlawful use/appropriation of this article, with heavy civil and criminal penalties for the infringer.
PhotoImage by the website www.freepick.com
The statistical services count all those receiving unemployment benefits as unemployed. However, many unemployed people are not registered. More specifically:
1. Citizens who have lost their job place because of the pandemic but receive allowances from exceptional government subsidies.
For example, in the US unemployment benefits are $600 a week and which the federal government granted to the unemployed in the spring and it was this money that kept the consumption of American households upright. This programme expired last summer and unless a new fiscal support package is drawn up, households in the US will find it difficult to survive.
2. Citizens who have given up any attempt to find work and have been deleted from the lists of unemployment offices.
3. Citizens who have emigrated and are looking for work outside their countries.
4. Citizens working under part-time work.
5. Citizens who have had businesses that have gone bankrupt and because they have debts cannot register with the unemployment office.
6. Migration flows and, more generally, migrants who work for an exceptionally low wage or work in the shadow work without paying insurance contributions.
This enables us to believe that real levels of unemployment are twice as high as official levels of unemployment.
This fact that there is a very high supply of labour in relation to labour demand is the element that keeps wage levels low, thus drastically limiting the ejection of demand and consumption which will in other circumstances lead to an increase in production and an increase in demand for labour.
Real unemployment in the euro area should be estimated at close to 30-35 million unemployed.
Official unemployment in the US in April 2020 and due to the lockdown reached 15%, while in September it was lockdown 7,9%. By the end of the autumn, mass layoffs will be launched by companies such as Walt Disney and, of course, in addition to the expected layoffs of airlines in an existential quagmire.
By the end of August, 850000 small businesses had been locked in (Source: Womply). In addition, 38000 hotels and 36000 gym chains and beauty centers are expected to close. The tourism industry alone expects 1,6 million hotel staff jobs to be lost.
In addition, the U.S. Department of Labour announced a few days ago that 216,000 positions of state employees employed at either federal or state level were abolished during September. The main reason is the decline in tax revenues at both the federal and state levels.
All this bad news without yet counting the effects of second and third lockdown on economies.
