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Labour market prospects and policies to soften the impact of the financial crisis


  • Carone, Giuseppe
  • Koopman, Gert Jan
  • Pichelmann, Karl


The global downturn is now strongly affecting EU labour markets. In light of the downward revision to the growth projections and the uncertainty created by the financial meltdown, the outlook for employment has deteriorated considerably. This would also be consistent with the experience from previous downturns, where the full labour market impact only materialised after 2-3 quarters. On current policies, the Commission projects employment growth to turn negative during the next two years, accompanied by a steep rise in unemployment, which would be around 11.5% in 2010 in the euro area. However, labour market outcomes depend crucially on policy responses. The good news here is that our assessment shows that measures undertaken so far within the framework of the European Economic Recovery Plan are promising. The in-built capacities of the social safety nets are fully playing their role and a number of new innovative policies are also keeping people in employment. However, given the spillovers that many of these policies create on other Member States labour market measures could be more effective if co-ordination at the European level was strengthened. A stronger more co-ordinated response would also help to soften the impact of much higher unemployment levels on Europe's potential rate of growth in the future.

Suggested Citation

  • Carone, Giuseppe & Koopman, Gert Jan & Pichelmann, Karl, 2009. "Labour market prospects and policies to soften the impact of the financial crisis," MPRA Paper 24864, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24864

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    References listed on IDEAS

    1. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308 Elsevier.
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    Cited by:

    1. World Bank, 2010. "Croatia : Social Impact of the Crisis and Building Resilience," World Bank Other Operational Studies 2903, The World Bank.
    2. Beleva, Iskra, 2011. "European labour markets challenges in the context of the “Europe 2020” srategy," MPRA Paper 34347, University Library of Munich, Germany.
    3. Beleva, Iskra, 2011. "The EU labour market crisis and recovery policies. The Bulgarian response to the crisis," MPRA Paper 33505, University Library of Munich, Germany.
    4. Gratiela Georgiana Carica, 2011. "A Framework Analysis Of European Labour Market Policies," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3(1), pages 13-21, March.
    5. World Bank, 2010. "Poland - Public Expenditure Review : Background Papers," World Bank Other Operational Studies 2856, The World Bank.
    6. Alina Hagiu & Emilia Ungureanu, 2010. "The Effects Of The World Economic Crisis On The Employment In The Auto Industry," Romanian Economic Business Review, Romanian-American University, vol. 5(3), pages 145-153, September.
    7. Projektgruppe Gemeinschaftsdiagnose, 2010. "Gemeinschaftsdiagnose Frühjahr 2010: Erholung setzt sich fort - Risiken bleiben groß," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 63(08), pages 03-78, April.

    More about this item


    Labour market; economic crisis; financial crisis; employment; unemployment; exit strategy; Recovery plan;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination


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