When even the political elite are voicing concerns about the possible social implications of youth unemployment rates in Europe being so egregiously high, you know that there are problems. The question many have is that until now riots have been few and far between (most notably Sweden and Switzerland recently); so why are the main areas of massive unemployment not seeing the widespread chaos? The answer, perhaps unsurprisingly, is in government handouts but as Stratfor notes, time is running out for the benefit-beholden generation and perhaps the governments will finally see what so many have been fearful of.
Greece, Spain and Portugal have the highest rates of unemployment in the eurozone, and all have relied heavily on unemployment benefits as a safety net for people who have lost their jobs. Of the three countries, Spain’s unemployment system is the most generous. On average, Spain currently spends roughly 800 euros ($1,030) per inhabitant on these benefits (from 483 euros in 2007), while Greece spends some 330 euros (from 216 euros in 2007) and Portugal around 230 euros (from 182 euros in 2007).
The unemployment benefits system — along with other social benefits such as pensions and increased remittance inflows from family members abroad, as well as aid from family members at home and, to some extent, informal economic activities — is somewhat mitigating the social aspect of the European economic crisis.
However, these safety nets are limited.
Because of the pervasiveness of the crisis, long-term unemployment (people who have been out of work for a year or more) is growing in the EU periphery and currently affects almost half of the unemployed population of Greece, Spain and Portugal. This means that many people will likely lose their unemployment benefits before they find a new job. Rising unemployment is also leading to a shrinking tax base in these countries, giving central governments fewer economic resources to support a more expensive system of unemployment benefits.
With unemployment projected to remain well above its pre-crisis level in the medium term, questions over the sustainability of unemployment insurance will remain a key issue in the periphery of the eurozone.