Unemployment: Are trade unions and minimum wage laws the culprits?

When unemployment rates reached double-digit levels in many OECD countries at the beginning of the 1990s, fighting unemployment became the prime target of economic policy-making and a major focus of economic research1. The OECD (1994) launched a major study - the OECD Jobs Study - which concluded "that the main factor underlying persistent high unemployment has been the inability of the product and labour markets in many OECD economies to adapt to change (...). This inability has been reflected in increased structural unemployment.... The Jobs Study recommended a broad programme of macroeconomic and structural policy reform designed to reduce unemployment sustainably. It stressed that broad and deep structural reforms across a range of markets, including specifically the labour market, are needed to increase the 'speed limits' of sustainable economic growth and reduce persistently high structural unemployment" (The Commonwealth Treasury of Australia 1997: 27f.) - the idea of lasting unemployment being strongly related to inflexible, over-regulated labour markets has been termed IMF-OECD consensus and shaped common knowledge about and policies to combat unemployment during the socalled neo-liberal era. [...]