3 April 2014

This assignment, prepared in the framework of the course English for Economists IV has as its object the world economic crisis and unemployment. The choice of this topic, was because nowadays the global crisis and in particular the economic crisis affects many sectors of the economy, one of the most serious consequences of which is unemployment. With this specific task we try to answer basic questions such as: what is the world economic crisis?
How does the world economic crisis affect unemployment? What are the negative effects of the world financial crisis in unemployment? Are there any positive consequences of it? What are the future prospects?
The paper is structured as follows. In the first chapter we will deal with the global economic crisis and we will compare it with the Greek crisis. In the second chapter will deal with the global crisis and unemployment and focus on the causes and consequences of the global crisis in unemployment. Specifically we will point out its negative and positive effects in unemployment. In the third chapter the emphasis is placed on the future prospects, how it is believed that it will evolve the global economic crisis and unemployment. The paper concludes with the presentation of a few conclusions. In the appendix, the reader can find graphs showing data.
The present global economic crisis is the worst the world has experienced since the Great
Depression from the late 1920s until World War II, which was the most extended and most extensive depression of the 20th century. For earlier generations, given to minor recessions of the new stage of globalization, the despair of the Great Depression is yet nothing more than a myth. Nevertheless, the failure of two Bear Stearns Hedge funds in the middle of
2007 showed what came to be known as a rise in subprime mortgage delinquencies and foreclosures, reinstating the world to an era of bank failures, a credit crisis, private prevarications and massive layoffs. In the new world of closely reliant economies, the crisis affected practically every country of the world, as well as Greece, which has lately received extensive attention in the international media.
When the world economic recession hit, Greece's concealed borrowings came to light and the country was unprepared for manage. If you follow the events about Greece you must be in shock about its present situation. Millions of people are in debt, companies are closing or

moving one after the other and Greece has one of the highest unemployment rates.
Consistent with government statistics, the unemployment rate hit 27 percent on November of 2012 and surpassed the 30 percent in the end of 2013. The debt levels went so high and as a result Greece was not able to manage and redeem its loans. So, Greece, as the only solution, had to ask massive loans from the European Union and IMF, even though that was not enough. The lack of economic growth was the reason that Greece cannot improve its government’s incomes and its tax revenues. In order to pay its loans, Greece was forced to rely on new assistance. The European Union and IMF decided to provide Greece two more years (2016) to reduce the deficit. “Greece's debts are now expected to fall to 124% of GDP by 2020.” If the Greek government will not be able to defray its debt, Greece’s future is not so well-disposed. The situation will get worse if savers and investors withdraw their money from weak and unstable economies, such as Greece, Spain and Portugal, and deposit to countries like German, which its economy is healthy and strong. The above fact could lead the Greek economy out of Eurozone and back to drachma, which make harder to repay its loans.
The Global economic downturn climaxed by the following collapse of Lehman Brothers in
2008, the fourth largest investment bank in the U.S.- resulted in a global unemployment crisis whose impact varies across countries and regions. Worldwide, economists dispute on what is the exact cause of unemployment, so there are many explanations and theories about this topic. Unemployment stems from plenty of factors. First of all unemployment is closely related to market. More specifically to deficient demand, which leads to a lack of capacity of the economy to create more job opportunities. When consumer demand for most goods and services slows enough, businesses lose too much profit and automatically less output is needed. As a result, many businesses are forced to employ fewer workers because they are producing fewer goods.
Another cause connects the unemployment with the development of technology. The technological progress means that fewer workers are required to product the same thing. In that way, productivity has been increased but many jobs demand skilled workforce, and old workers are temporary unemployed. A further cause is called classical explanation of unemployment. Economists, who support this theory, explain that unemployment occurs when real wages exceeds the market clearing level. They uphold that if wages were more flexible and government didn’t interfere in the adjustment of them, most unemployment could be solved. The cause of unemployment for them is the high adjustment of incomes.

According to ILO (International Labor Organization) estimates, global unemployment increased from 178 million in 2007 to 197 million in 2012 with a peak of 212 million in 2013.
Europe has been particularly hard hit with unemployment. Figures show 9.6% unemployment in 2009 and a record high of 11.7% in 2012. In Greece, unemployment was only 7.7% in 2008 and increased to 9.4% in 2009, 12.5% in 2010, 17.3% in 2011 and a staggering 23.8% in 2012. The youth unemployment rate hit 65% in Greece as compared to
16.3% in the U.S. The global rate for unemployed youth is 13% which translated into 75 million young people out of work.
Another significant factor in the unemployment crisis is the increase in long-term unemployment. In the euro-zone countries, Spain and Greece for instance, the duration of unemployment has reached 8 to 9 months. Even in countries such as the U.S., long-term unemployment affects 40% of the work force. This constitutes a serious problem as it adds considerable economic burden to the economy of a country, requiring governments to increase taxes or decrease spending in order to avoid a deficit. As far as the workers are concerned, job seekers who have been unemployed for long periods of time lose their skills rapidly making it difficult to find new employment in a similar occupation or skill level.
Although it is hard to image there have been positive aspects of unemployment, one positive change is that unemployment can often be the trigger for new careers. It gives workers the time and incentive they need to pursue new careers and education. For example, a laid-off worker may decide to go to college or retrain for a new career which may end up paying a better salary or making the worker happier in the long run. Moreover, a redundant worker may find the time to fulfill a dream of starting his own business. Many people have ideas in mind but never find the courage to leave a steady job and a safe income. When they are faced with long-term unemployment, they reassess their losses and find the courage to enact on their dreams. Furthermore, workers can use the time between jobs to reflect upon any lessons they have learned from losing a job. They can learn what is important in life and how not to take anything for granted. They may also learn how to live on less money. All in all, when the unemployed do finally find a new job, they will be stronger and have many new life lessons.
Unemployment in one’s home nation often forces young, educated workers to emigrate in search for employment. The best and the brightest tend to make two to three times the salary they would have made in their home country. Even taking into account the cost of living, this is a tremendous gain for the employee. Moreover, workers have the opportunity to experience a different culture and language. They will experience different working conditions and attitudes which they will carry with them indefinitely.

As the United Nations World Economic Situation and Prospects 2014 (WESP) states, “high unemployment remains a key challenge”. WESP makes clear that among developed countries the unemployment rate is expected to be reduced.Τhe United States unemployment rate is estimated to fall and reach 6.5 percent in the middle of 2015. In the
Euro area, the unemployment rate is estimated to nearly 12 per cent in 2013 and is supported that it will stabilize in 2014 to an average annual rate of 12.1 percent before finally starting to come down to 11.8 percent in 2015. Taking a more detailed analysis in the
European countries, unemployment in Germany remained in 2013 in 5 percent while Spain and Greece reached extraordinarily high unemployment rates of nearly 27 per cent, with youth unemployment rates being double (see chart 1 ). This particularly points out that the high unemployment in Europe will remain for 2 more years. In developing countries such as in North Africa and Western Asia extremely high unemployment rates are argued unlike in
East Asia where it is believed to remain low at about 3 per cent.
Source: Eurostat, “Euro area unemployment rate at 12.2%, EU28 at 11.0%”, 31 October
2013. The Greek & UK data are for July 2013.
According to monthly summaries and the economic developments perspective of Attica bank(January 2014), as regards in the forecast of the global economy, the International
Monetary Fund( IMF) notes that for the first time in two years there were upgraded forecasts for global growth. Most specifically, it considers a growth of 3.7 percent for 2014 and 3.9 percent for the world economy for 2015.According to the IMF forecasts, the growth in 2014 will reach 2.8 % in the U.S., 1% in the Eurozone, 7.5% in China and 2.4% in Britain.

Greece’s and the southern countries’ recovery will be low mostly because of the pressure due to high debt and fiscal problems that keep a low level of domestic demand.
To sum up, we can conclude that unemployment is well connected with crisis and that it has its negative and positive effects on economy. It is a debated issue and there are many aspects on this, economists throughout the world dispute in what are the main causes of unemployment and what are the real future prospects of this. Unemployment is definitely inherent with economic cycle and crisis phenomenon. When economy comes across with a crisis, the unemployment automatically increases. This event influences the demand of products, the individual choices and the investments of businesses. As a result, it can create barriers in the economic equilibrium, but also it can create many prospects for the long-term growth. Unemployment is a variable which made changes in the global economy, especially during crisis. Although, we can infer from the graphs, that there are many forecasts for growth of global economy in the near future. Even though global economy will develop, recovery will take more time for the countries which have a debt or fiscal problems.
Arthur,D. (2013,May 2) Long-Term unemployment ‘Is likely to Disappear’ : Paper, Business.
Retrieved from http://www.huffingtonpost.com/2013/02/05/long-term-unemployment-
_n_2617873.html
Alfonso Arpaia, Alessandro Turrini (2014, March 7) . What drives the EU labour-market mismatch, VOX: research-based policy analysis and commentary from leading economists.
Retrieved from http://www.voxeu.org/article/what-drives-eu-labour-market-mismatch
Anderton, Alain (2006). Economics (Fourth ed.). Ormskirk: Causeway.
BBC. "Eurozone crisis explained." BBC News. 27 Nov. 2012. British Broadcasting
Corporation.
Retrieved from http://www.bbc.com/news/business-13798000
Buzzle “causes of unemployment” Retrieved from: http://www.buzzle.com/articles/causesof-unemployment.html
Economics help “demand deficient unemployment“. Retrieved from: http://www.economicshelp.org/blog/1993/economics/demand-deficient-unemployment/
Effie Moore Salem (2010, August 16). Positive aspects of unemployment. Career Path.
Retrieved from http://www.careerpath360.com/index.php/positive-aspects-ofunemployment-8065/
Frangouli-Argyris, Justine. "Les Miserables of Greece." The Huffington Post. 20 Feb.
2013. TheHuffingtonPost.com.
Retrieved from

http://www.huffingtonpost.com/justine-frangouliargyris/les-miserables-ofgreece_b_2727973.html
Global finance “unemployment’s rates in countries around the world”
Retrieved from: http://www.gfmag.com/component/content/article/119-economicdata/12384-worlds-unemployment-ratescom.html#axzz2xiHTUIc1
Global employment trends 2014 (2014, January). International Labour Organisation.
Retrieved from http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/--publ/documents/publication/wcms_233953.pdf
George Friedman (2013,March 5) . Europe, unemployment and instability. Stratfor Global intelligence. Retrieved from http://www.stratfor.com/weekly/europe-unemployment-andinstability
Jerome, Harry (1934). Mechanization in Industry, National Bureau of Economic Research.
John Gibson, David McKenzie (2010, August 12). What are the consequences for development of the most highly skilled migrating? VOX: research-based policy analysis and commentary from leading economists. Retrieved from http://www.voxeu.org/article/braindrain-new-evidence
Mηνιαία Ανασκόπηση Οικονομικών Εξελίξεων και Προοπτικών Attica bank (January 2014).
“Παγκόσμια Οικονομία-ΔΝΤ:Πρόβλεψη παγκόσμιας ανάπτυξης”. Retrieved from images_siteimages_monthly_reports_2014_JAN_2014.pdf
United Nations Regional Information Centre for Western Europe (UNRIC). “UN:
Record high unemployment in Europe to persist for 2 years”. Retrieved from http://www.unric.org/en/latest-un-buzz/28988-un-record-high-unemployment-in-europeto-persist-for-2-years [ 15/3/2014]
Wikipedia. "Great Depression." Wikipedia. Wikimedia Foundation. Retrieved from http://en.wikipedia.org/wiki/Great_Depression .
World Economic Situation and Prospects 2014 (WESP) .
“high unemployment remains a key challenge”. Retrieved from 2014Chap1_en.pdf

Source: Eurostat