You’ve seen them – Television Makeover Shows like What Not to Wear and The Biggest Loser

By the end of the installment or the series, lives have been changed, presumably for the better. It remains to be seen whether Europe’s current makeover — a migratory one — will change lives for the better.

Unemployment is a key issue behind Europe’s makeover. According to Eurostat, unemployment in the EU-27 was at almost 11 percent in June 2013. That was slightly lower than May of 2013, but higher than June of last year. When you delve deeper into Europe’s unemployment, it’s clear that the problem is more pronounced in periphery countries, which typically are southern European. In March, unemployment in Germany (a core country) was about 5 percent, while in Greece and Spain (periphery countries) it was almost 27 percent.

Among younger populations, unemployment is even higher. In February 2013, 64 percent of young people in Greece were unemployed and 56 percent of those in Spain. This statistic is somewhat skewed because many younger people are in school.

Seeking greener pastures, citizens of many periphery countries have begun to emigrate. According to The Economist, a study by Real Instituto Elcano found that almost three-fourths of Spaniards under the age of 30 have considered moving abroad. Two percent of Portugal’s population has departed during the past two years, and a record 3,000 people are leaving Ireland each month. The destination of choice for many has been Germany.

According to The Economist, the exodus could exacerbate problems in high-debt countries:

“Labour is one of the main inputs to growth, and a reduction in the size of the underlying labour force through migration will shrink potential output across the periphery, making existing debt loads harder to bear. This could be especially bad if young workers are the ones leaving. That would worsen the dependency ratio as well; there would be fewer potential taxpayers in Spain and Italy to pay for the benefits flowing to a rapidly growing population of pensioners. The greater these migratory flows, the worse the fiscal outlook for the periphery.”

As with any makeover, it’s difficult to know whether the end result will be positive or lasting, but one thing is likely. The European Union is going to look different in the future.

 
 
 

Lexington Wealth Management