This document provides background information and hypotheses for a research paper on employment policies in the European Union. It discusses unemployment as a problem for EU member states, both due to long-term issues and the 2008 global economic crisis. The document will examine unemployment and policies in Spain, the UK, Italy, and the Czech Republic. It presents two hypotheses: that international factors have prompted concerted EU policy responses, or that domestic factors have led to mainly national policy approaches. It outlines what evidence would support each hypothesis.

1. Bobby Fraser
European Union Seminar, Research Paper
May 7, 2010
Employment Policies in the European Union
I. Hypotheses
Unemployment is one of the most detrimental economic, social and political problems within
any nation. As a result of the 2008 global economic crisis, unemployment has increased in most
all member states of the European Union. However, the issue of chronic unemployment – which
predates the crisis – has also plagued countries within the European Union. Unemployment is
evermore becoming a Europe-wide phenomenon rather than solely the misfortune of certain
member states. As of January 2010, the 27 European Union member countries had an average
unemployment rate reaching 9.5%.1
My research throughout this paper will discuss
unemployment in the European Union and specifically within four EU Member States. The
research below will attempt to define unemployment problems on both secular and cyclical
measures and the attempts by governments to either work together, jointly through the EU, or to
address these issues separately. Each government within the European Union has an ability to
cooperate to a higher degree within the European Union; each at the same time has the ability to
construct its own policies affecting employment.
The Kingdom of Spain currently has the highest rate of unemployment in the European Union,
with 4.9 million people unemployed – 20.5% of the country’s able workforce – according to
official figures, the actual figure may be even higher.2
This can be attributed to a number of
factors, including long-term pre-existing unemployment issues and a heightened struggle in
Spain’s largest sectors of the economy such as banking, investment and, most importantly,
construction after the 2008 downturn. I seek to specify the extent to which this rate of
1
Eurostat.com, Employment Rate by Gender (April 2010),
<http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&language=en&pcode=teilm020&tableSelection=1&plugin
=1> (accessed May 2010).
2
Al Goodman, “Spain’s Unemployment Tops 20%,” CNN.com, 30 April 2010.

2. Fraser 2
unemployment is similar to, or different from Spain’s EU partners also facing unemployment
problems.
My research will begin with an examination of Spain and then proceed to the United
Kingdom, due to its large market size, relatively strong economy and its more domestically
focused political agenda. Then, I will turn my attention to the Italian Republic, Europe’s fourth
largest economy, and a strong supporter of the European Union, to review how its government
has worked to combat rising unemployment levels. In Italy, unemployment has been rising for
eight straight months and is currently at 8.6%, with expectations that this number will rise above
10% in the coming months.3
Finally, I will focus on the Czech Republic, which has recently
faced significant problems due to the recession. The Czech Republic also faces secular, or long-
term, unemployment problems and is still under the usage of its original currency, the koruna; it
has a slightly more volatile economy compared to the other three nations. The Czech Republic
currently maintains an unemployment rate of 8.2%, a rate that has increased by almost 4% over
the past year.4
Each of these economies has unique characteristics when compared to its EU
partners and represents a significantly different path to what makes up the European Union. Italy
and the United Kingdom represent large economies with different popular attitudes toward the
European Union, largely negative in the UK while positive in Italy. Spain represents a medium
sized economy, governed by the center-left. The Czech Republic is a smaller, less economically
developed nation and is governed by the center-right. All four countries examined display
rapidly rising unemployment rates.
My research hypothesis seeks to address the international system level of analysis by
reviewing the factors that contribute to unemployment and concerted efforts to undertake
3
“Italian Unemployment Rate Rises as Recovery Fails to Create Jobs”, Business Week, 1 March 2010.
4
Eurostat.com, Employment Rate by Gender (April 2010).

3. Fraser 3
policies that will stem job losses. One such policy is the European Employment Strategy, which
seeks to address unemployment across the European Union. International factors such as the
crisis in the U.S. economy of 2008-2009, which has had major repercussions in Europe in
various sectors such as banking and investment, real estate and manufactures; the ensuing
contraction of the world economy, affecting trade and investment opportunities for EU Member
States around the globe; and the rise in emigration to the European Union from North Africa and
other parts of the developing world (both before and since the economic crisis) have increased
pressures on the Member States to cooperate as EU partners in taking concerted measures to
combat unemployment. My research hypothesis assumes that as each of these international
factors has caused harm to Member States as a whole, they will be interested in formulating EU
policies with the intent of preventing the negative effect the international factors. The
independent variables of my research hypothesis are these international factors, while my
dependent variable is the employment policies of EU member states (concerted, in this case).
The alternative hypothesis of this paper focuses on the domestic level of analysis. It asserts
that domestic factors specific to each Member State have caused many countries to develop their
own policies in attempting to address unemployment levels; thus the nations examined in this
paper are not working in a concerted fashion through the European Union. National and
domestic factors in EU Member States, reflecting specific or unique circumstances that are not
always shared by a given state’s EU partners, have prompted a number of them to pursue their
own employment policies, independently of the EU. Such factors include secular (long-term) vs.
cyclical (short-term and crisis-driven) unemployment tendencies in various EU member States;
the role of recent immigrants in swelling unemployment rolls; the ideological inclinations and
policy preferences of governing parties, whether of the center-left or center-right; and the role of

4. Fraser 4
the business sector, labor unions and other relevant interest groups. The independent variables of
the alternative hypothesis are the national and domestic factors affecting each EU Member State.
The dependent variable is the employment policies of EU Member States (predominately
national, in this case).
If the research hypothesis is true, then we would expect the evidence to show that (a) the
U.S. economic crisis since 2008 has had negative influences on the economies of the EU
Member States examined here, affecting a variety of sectors and causing a rise in unemployment ;
(b) the attendant contraction of the global economy has also contributed to the rise of
unemployment in these countries, affecting trade, investment and related sectors; (c) the leaders
of the countries under examination have called for concerted action to combat unemployment
through the EU and the G-20; (d) EU leaders in Brussels, such as Commission President Barroso
and relevant Commissioners, have also called for concerted action against unemployment; (e) the
countries examined here have taken concerted action with their EU partners in seeking to reduce
unemployment, including economic stimulus measures as well as joint actions to reduce
immigration.
If the alternative hypothesis is correct, we would expect to find that (a) the countries
examined here differ with respect to whether their unemployment problems are largely secular
(pre-crisis) or cyclical (and largely crisis related); (b) they also differ in the extent to which
recent unemployment rates have been driven up by ever growing numbers of immigrants; (c) of
the countries examined here, center-right governments have tended to favor initiatives designed
to stimulate private-sector hiring, while center-left governments have favored greater infusions
of public funds to hire the unemployed directly; (d) the impact of business labor and other
relevant interest groups has tended to vary among these countries; (e) the governments examined

5. Fraser 5
here, in addition to cooperating at a multilateral or supranational level, have taken a number of
measures on their own to bring unemployment rates down.
II. Literature Review and Sources
I have found a few literary articles that discuss the problems of unemployment from a variety
of aspects, both across the European Union Member States and within specific EU Member
States. However, scholarly literature on the European Union and EU Member States’ recent
reactions to the economic recession of 2008-2009 has been scarcer than I initially expected.
Authors Marcela Corsi and Alessandro Roncaglia write about the systemic problems that the EU
faces in addressing unemployment rates in their article, “The Employment Issue in the European
Union”. Here they address both the crisis-driven and more chronic problems that the EU faces
with unemployment. In their article they find that one of the main problems in the European
Union as a whole is the inflexibility of the labor market and the disincentives that companies
have to hire part-time workers or for workers to move to a new job, thus affecting unemployment
levels negatively. 5
This follows a general consensus across the European Union that there are
labor protection policies in place that make it difficult for the movement and transition of labor.
Similarly, in a separate article by Per H. Jensen, “Employment and Unemployment Policies and
the functioning of a Labor Market in Comparative Perspective,” he looks at the specific welfare
policies meant to address unemployment by four EU countries, including Italy and the United
Kingdom.6
In an article titled, “Active Employment Policies in Spain,” the authors Elisabeth
Villagomez and Domingo Carbonell review Spain’s policies to stem rising unemployment levels.
They specifically address the successes and failures of Spanish employment policy and the
5
Marcella Corsi and Alessandro Roncaglia, “The employment issue in the European Union,” Journal of Post
Keynesian Economics, vol. 25, no. 1 (Autumn 2002), pp. 141-59.
6
Jensen, Per H. “Employment and Unemployment Policies and the Functioning of the Labour Market in a
Comaprative Perspective,” Acta Sociologica, vol. 32, no. 4 (1989), pp 405-417.

6. Fraser 6
causes of its weakness.7
Finally, in an article reviewing the EES, Mikkel Mailand finds that the
policies from the EU have had an uneven impact on Member States. His article, “The Uneven
Impact of Employment Strategy on Member States’ Employment Policies: A Comparative
Analysis,” proved useful as it compared the effects of the EES in Spain and the UK, two
Member States examined in my research.8
For my research paper, I have looked at several additional sources for both theory and more
current information. The official EU website and relative news sites including Euractiv.com and
Euobservor.com proved helpful in providing news and reports from Brussels. The official
government websites of the United Kingdom, Czech Republic, Italy and Spain were referenced
to determine the nations’ official employment policies. Textbook sources, such as European
Union: Economics and Polices, by Ali M. El-Agraa, have provided helpful background and
theory of the economic elements that constitute EU policy. The Economist, Business Week, The
Financial Times and Eurostat.com served most useful for up to date economic data, trends and
statistics. Each of these resources has current records and analyses of the economic situation
within Spain, the United Kingdom, the Czech Republic and Italy. They will serve to provide a
relatively strong amount of my research and will provide a more recent picture of current
unemployment occurrences, along with national newspapers in the countries examined. As
unemployment changes on a day-to-day basis, any type of scholarly work is important, but not as
important nor as relevant as the daily media-based resources, with the most up-to-date figures
and data on unemployment levels.
7
Villagomez, Elizabeth and Domingo Carbonell. “Active Employment Policies in Spain: Statements and
Comments,” Almenara Estudios Económicos y Socialies, (May 2008), pp. 1-5.
8
Mikkel Mailand. “The Uneven Impact of the European Employment Strategy on Member States’ Employment
Policies: A Comparative Analysis,” Journal of European Social Policy, vol. 18, no. 353 (2008), pp. 353-365.

7. Fraser 7
III. Testing the Research Hypothesis
As I noted above, the first expectation of the research hypothesis is that the U.S. economic
crisis since 2008 has had negative influences on the economies of the four EU member states
examined here, affecting a variety of sectors and causing a rise in their respective unemployment
levels. In support of this expectation, a 2009 economic report from Eurostat.com explains that
“the economic crisis has deeply hit the labor markets throughout Europe. In both the euro area
and the EU27, the number of unemployed has increased each month since its low in March
2008.”9
The report particularly noted that Spain and Italy were the first Member States to see
rising unemployment levels as a result of the 2008 U.S. economic crisis, explaining that “sectors
such as construction, the financial sector and the automotive industry have been hit hard.”10
Spain, which has been hurt by the decrease in the availability of international credit for
construction and building, has halted the once-booming construction sector that employed
millions.11
In the United Kingdom, financial stress from the housing mortgage bust connected to
the crisis in the U.S. led to the failure and the restriction of lending, leading to lower growth and
higher unemployment rates.12
A report by the European Commission found that unemployment
levels have doubled in the UK since the onset of the economic crisis, with 800,000 jobs lost. 13
The evidence suggests that the effects of the U.S. subprime mortgage crisis have affected the
United Kingdom’s unemployment levels negatively.
9
Remko Hijman, “Sharp rise in Unemployment in the EU,” Eurostat.com, 17 July 2009, 2.
10
Ibid., 4.
11
Nelson D. Schwartz, “In Spain, A Soaring Jobless Rate for Young Workers,” The New York Times, 31 December
2009, Global Business Section.
12
European Commission, European Economic Forecast (Spring 2010),
<http://ec.europa.eu/economy_finance/publications/european_economy/2010/pdf/ee-2010-2_en.pdf> (accessed May
2010).
13
Loc. cit.

8. Fraser 8
In contrast to my first expectation that the U.S. economic crisis has negatively influenced the
unemployment levels of the four member states observed, there exists significant evidence that
unemployment levels in these states have increased based on systemic issues, such as the
inflexibility in the labor market or tax structure that has hindered growth. I shall further examine
this evidence in my alternative hypothesis.
Overall, the evidence supports the expectation that the U.S. subprime mortgage crisis has
contributed to an economic downturn in the economies of Spain, the United Kingdom, Italy and
the Czech Republic. Nevertheless, this evidence can be viewed only as part of these economies’
problems with rising unemployment levels, as each economy examined displays secular
unemployment problems based on structural elements of each of their respective economies.
The second expectation of the research hypothesis is that the attendant contraction of the
global economy has also contributed to the rise of unemployment in these countries, affecting
trade, investment and related sectors. The economies of Italy and the Czech Republic
demonstrate these international effects most clearly. In Italy, the economic crisis has
significantly affected investment and growth. A recent article from The Economist explained that
Italy is just now facing the major effects of the economic recession, with GDP falling by 5.1% in
2009.14
With growth slowing in the country, the unemployment rate has steadily increased to its
highest levels since the onset of the world economic downturn. The Czech Republic, with 75%
of its GDP based on exports, presents a high degree of openness to foreign investors. 15
The
European Commission noted in its May 2010 economic forecast for the Czech Republic that the
slump in investment and economic activity has sped up unemployment rates significantly. Before
the economic crisis, the Czech Republic benefited from international investment from European
14
“Still Tottering: Italy’s Troubled Economy,” The Economist, 15 April 2010, Europe Section.
15
European Commission. European Economic Forecast (Spring 2010).

9. Fraser 9
nations and the United States, but this investment subsequently declined with the onset of severe
stress in the financial markets.
Contradicting this expectation, some evidence suggests that the Member State economies of
the European Union face pre-existing factors that influence their rising unemployment levels.
These factors include the composition of labor union movements as well as the implementation
of labor policies. As Jensen explains in his article, “In Britain we have a decentralized union
movement with a fragmented wage bargaining system.”16
Jensen goes on to note that this causes
economic policies that are not as focused on the macro-economic situation of the economy.
Spain has also faced similar long-term issues. An April 2010 article from The Economist
explains that “Spain’s structural faults were long hidden by a housing bubble, and have been
glaringly exposed, from troubled savings banks to creaky public finances, the problems are
piling up.”17
These elements will be explored in depth in my display of evidence for the
alternative hypothesis.
My second expectation for my hypothesis is generally supported by the evidence presented.
However, some economists also note that domestic factors, such as the impact of labor unions
and internal government policies, have negatively impacted unemployment rates as well.
The third expectation of my research hypothesis is that the leaders of Spain, Italy, the United
Kingdom and the Czech Republic have each called for concerted action to combat
unemployment through the EU and the G-20. The evidence in support of this is relatively weak.
Government leaders of Spain, the United Kingdom, Italy and the Czech Republic have mainly
called for policy action based on party affiliation and addressing their own national crisis. At an
individual level of analysis, Prime Minister Gordon Brown of the United Kingdom did not call
16
Jensen, 411.
17
“The Mañana Syndrome: Spain’s Economic Woes,” The Economist, 25 March 2010, Europe Section.

10. Fraser 10
for the EU to assist the UK with its highest unemployment rates in 16-years; rather he explained,
“We are not out of the woods yet. That is why it is so important that we keep increasing the
support to the unemployed…also that we sustain the overall support for the economy.”18
He does
not call on the EU for assistance or collaboration. This and other contradictory evidence will be
addressed in the alternative hypothesis.
The reason for the reluctance of the leaders of these countries to call for EU assistance with
their rising levels of unemployment may be a direct result of the rather weak institutional
mechanisms in the European Union available to address unemployment issues. For over a decade
the European Union has been seeking to increase its focus on the problem of unemployment. The
main mechanism used in addressing unemployment is the European Employment Strategy (EES).
The EES is part of the European Commission, under Commissioner László Andor of Hungary,
who is responsible for Employment, Social Affairs and Equal Opportunities. The EES was
originally created in 1997 as part of the Luxembourg Process.19
The main focus of the EES is to
address labor market efficiency and to develop open dialogs between Member States to
comprehensively address unemployment issues across the European Union. The EES includes
several components. First, it operates with what is known as the Open Method of Coordination
(OMC). The OMC takes policy integration to a greater level than in place before the EES. The
OMC consists of four main elements of decentralized decision-making; intergovernmental
Commission-generated suggestions of areas for improvement; enforcement by peer pressure (or
18
Brian Groom, “UK Unemployment Climbs to 16-year High,” The Financial Times, 21 April 2010, Business
Section.
19
Ali M. El-Agraa, The European Union: Economics and Policies, Eighth Edition (Cambridge: Cambridge
University Press, 2007), 449.

11. Fraser 11
benchmarking); and oversight by the EP and the European Council in the form of policy reports
and analysis.20
The EES process is based on a yearly Joint Economic Report, compiled with comparative
analysis from the previous year. The reports look at the overall employment situation in each
member state and it provides policy recommendations to assist each member state in moving
forward over the next year to decrease unemployment levels. These recommendations, however,
are not binding and are up to Member States of the EU to adopt as policies. The
recommendations of the EES are supported through the European Social Fund (ESF). The ESF is
a fund that focuses on addressing employment, living standards, growth and jobs within EU
Member States.21
Its current 5 year plan, from 2007-2013 finances projects in every EU Member
State.
The evidence does not strongly support my expectation that leaders of EU member states
have called for a concerted effort to address EU unemployment levels. This result is striking, as
two of the three countries examined, Spain and the Czech Republic, have held the consecutive
Member State Presidencies of the EU.
The fourth expectation of my research hypothesis predicts that the EU leaders in Brussels,
such as Commission President Barroso and Employment, Social Affairs and Inclusion
Commissioner László Andor, have called for concerted action against unemployment. As part of
the EU 2020 strategy to address employment and social policy of Member States, several
members of the European Parliament’s Employment and Social Affairs committee have stressed
the need to “open up labor market access to people currently excluded from it, such as disabled
20
El-Agraa, 454.
21
European Commission, The European Social Fund (2010),
<http://ec.europa.eu/employment_social/esf/discover/esf_en.htm> (accessed May 2010).

12. Fraser 12
people, younger and older people, ethnic minorities migrants and long-term unemployed.”22
They also called for the strategy to focus on targets to address income and poverty in a recent
press release. Commission President Jose Manual Barroso has commented, “Europe 2020 must
generate commitment…We must focus on working together as European institutions, Member
States… to build our common future: a smart, sustainable and inclusive economy with high
levels of employment.”23
Other evidence and comments from EU leaders have contradicted the expectation. Some
comments even suggest the limitations of EU intervention in employment policies. In recent
comments regarding the ESF fund’s use as a means to stimulate EU Member States’ economies,
Commissioner Andor stated, “We have a very strong opinion about this, that it should be used to
activate the labor market, for re-skilling programs.”24
In a later speech to the European Union
Economic and Social Committee, Commissioner Andor cemented his comments about the ESF’s
role for improving skills, stating that “the ESF is supporting the automotive industry with 4
million euro, helping 1000 people from various companies to build their skills – and another 400
workers who are specifically in danger of unemployment.”25
The evidence demonstrates that relevant leaders in the EU have in principle supported
measures to increase a concerted effort to address unemployment. However, the measures
actually taken tend to be limited or watered down. For example, some of the comments by
22
European Parliament, EU 2020 Strategy: High Employment and Job Quality Must Be Key Aims, Say MEPs (April
2010), <http://www.europarl.europa.eu/news/expert/infopress_page/048-73522-116-04-18-908-
20100426IPR73482-26-04-2010-2010-false/default_en.htm> (accessed May 2010).
23
European Commission, EU Partners Meet to Debate Exit from the Crisis and the EU 2020 Strategy (March 2010),
<http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/364&format=HTML&aged=0&language=EN&gui
Language=en> (accessed May 2010).
24
Valentina Pop, “Cash-strapped States Slow at Tapping EU Funds,” Euobserver.com, 1 April 2010, Regions and
Cities Section.
25
European Commission, EU Commissioner Andor Responsible for Employment, Social Affiars and Inclusion –
European Economic and Social Committee Brussels (April 2010),
<http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/186&format=HTML&aged=0&language=E
N&guiLanguage=en> (accessed May 2010).

13. Fraser 13
Commissioner Andor suggest that there is willingness in the EU to focus only on the skills and
education side of unemployment and to let specific member states deal with stimulus and
unemployment benefits. This limitation comes in spite of the newly formed 2020 strategy, which
has pushed for wider targeted efforts to address unemployment.
The final expectation of my research hypothesis is that Spain, the United Kingdom, Italy and
the Czech Republic have taken concerted action with their EU partners in seeking to reduce
unemployment, including economic stimulus measures as well as joint actions to reduce
unemployment. As noted above, at the latest EU Summit in March 2010 the European Council
agreed to “EU 2020: A New Strategy for Jobs and Growth.” The proposal for EU 2020 included
suggestions to governments to begin to curb fiscal policy and to begin to coordinate national
polices for exiting the crisis to a higher degree.
To the contrary, much of the evidence suggests that the leaders of each of these four Member
States have not taken unified action to address unemployment and they have not pursued
concerted stimulus efforts from the EU. Even though the European Social Fund finances
programs to reduce unemployment in each of the four countries examined, these funds are
concentrated on small skills-based programs. Addressing the financial crisis and unemployment
was mainly left for the fiscal policies of Spain, the UK, Italy and the Czech Republic to define. A
recent European Employment Observatory quarterly report from March 2010 noted that each of
the four countries implemented their own stimulus programs and other measures to address
unemployment levels.
The evidence is largely inconsistent with the research hypothesis. Some expectations are
supported for the research hypothesis while others are not. Evidence supports the notion that
international factors, such as the U.S. economic crisis and the world economic downturn, have

14. Fraser 14
negatively impacted unemployment rates; however, there is significant contradictory evidence to
suggest that there are long-term economic problems facing each country examined. Contrary to
our expectations, the leaders of Spain, the United Kingdom, Italy and the Czech Republic have
not strongly expressed their support for a more concerted EU effort to address rising
unemployment levels in their respective countries. Leaders of the EU have called for more
unified policies for employment; however, they have also recognized the limits of their ability to
address unemployment levels. The evidence also suggests that the minimal EU mechanisms
meant to address unemployment levels in EU member states, like the ESF, have been focused
only on funding specific skills-based projects and not on taking a concerted effort to combat
unemployment.
IV. Testing the Alternative Hypothesis
As the first expectation of my alternative hypothesis suggests, the countries examined here
differ with respect to whether their unemployment problems are largely secular (pre-crisis) or
cyclical (and largely crisis-related). In support of this expectation, each of the countries and the
European Union as a whole saw higher rates of unemployment even before the economic crisis.
In a report on Spanish employment policies, authors Elizabeth Villagomez and Domingo
Carbonell find that “the Spanish labor market continues to be highly fragmented with a high
level of fixed-term contracts and little flexibility”26
They further noted that the decade-long
problem of immigration and the lack of a skilled labor force has contributed to unemployment
levels in Spain and make the foundations of the problem secular, even though there have been
significant crisis-related elements to the rising unemployment levels. In the United Kingdom, a
recent report in The Economist notes that “Britain’s economy was overhyped before the
26
Villagomez and Carbonell, 2.

15. Fraser 15
recession.”27
However, as Per H. Jensen notes in his article, Great Britain had a flexible labor
market resulting from labor policy reforms during the 1980’s. The unemployment levels rising in
Great Britain are primarily crisis-related. Jensen assesses that rising unemployment levels in
Italy “have been considerable and the structure of unemployment has been marked by enormous
regional divides.” This suggests that the problem is more secular than cyclical. In the Czech
Republic, however, the rising unemployment rate is more crisis-related. As the economy was
heavily open to trade and investment, between 2004 and 2006 it saw a 6% increase in growth
each year.28
Without the implementation of the euro currency in the Czech Republic, many
conclude they were able to use monetary policy and a higher deficit than countries with the euro
could to grow their economy.29
Not much evidence served to contradict the expectations that the four countries examined
differ in relation to whether their employment problems are secular or cyclical. In Spain and Italy
the problems are secular, while in the Czech Republic and the United Kingdom the problems are
cyclical, although all nations suffered increases in unemployment due to the world economic
downturn.
The second expectation of my alternative hypothesis suggests that, Spain, the United
Kingdom, Italy and the Czech Republic each differ in the extent to which recent unemployment
rates have been driven up by ever growing numbers of immigrants. The evidence suggests that
each nation has faced different complexities presented by immigration from within the EU and
from external nations. Spain, before the crisis, was widely open to immigration flows. According
to Business Week, in 2007 the country hosted “more than 3 million foreigners from places as
27
“The Pain to Come: The British Economy,” The Economist, 25 March 2010, Briefings Section.
28
European Commission, European Economic Forecast (Spring 2010).
29
Stephan Delbos, “Election Outcome Will Influence the Euro Adoption,” Prague Post, 7 April 2010, Business
Section.

16. Fraser 16
diverse as Romania, Morocco and South America …11% of the country’s 44 million
residents.”30
Many of these immigrants came to work in the country’s rapidly expanding
construction sector; they were desired for their willingness to work longer hours and for lower
wages on fixed contracts. As noted above, when the housing bubble burst in 2008, halting the
construction industry, many of these immigrants became unemployed. This led to the present
problem of excess unskilled labor in Spain. The United Kingdom has been confronted by
significant Eastern European immigration as part of the EU free movement laws. However,
Migration Watch UK, run by the former British Ambassador to Saudi Arabia, has found that
70% of British immigration comes from outside the EU27.31
In a report on migrant and UK
citizen employment patterns, Migration Watch UK found that “employment of British born
workers and of migrant workers both increased as the economy grew from 1997-2004. However,
the arrival of East European migrants after 2004 coincided with a sharp fall in the employment of
British workers.”32
In Italy the right-wing Northern League party, part of Prime Minister
Berlusconi’s governing coalition, has proven ardently anti-immigrant. In 2009 the government
passed an anti-immigration measure, led by the Northern League Interior Minister Roberto
Moroni, which would fine undocumented immigrants up to €10,000 for their crime. One
Northern League MP stated, “We just want to be sure that the immigrants who arrive on our land
want to be here to work.”33
The measures were popularly supported by Italians, who feared
30
“Spain: Immigrants Welcome,” Business Week, 21 May 2007, Global Business Section.
31
Migration Watch UK, What Can Be Done? (2010), <http://www.migrationwatchuk.org/whatCanBeDone>
(accessed May 2010).
32
Migration Watch UK, Impact of Immigration on Employment of British Born (2008),
<http://www.migrationwatchuk.org/dynPdf/briefingPaper_3.7_32_20081215.pdf> (accessed May 2010).
33
“Italy’s Immigrants Despair at New Laws,” BBC.com, 27 July 2009, Europe Section.

17. Fraser 17
rising unemployment rates after nearly 40,000 immigrants arrived from countries in Northern
Africa in 2008.34
There is not a heavy amount of evidence that contradicts the expectation that immigration has
negatively affected unemployment rates. In Spain, the UK and Italy, employment rates have
generally increased, including those for unskilled immigrant labor, after the 2008 economic crisis.
The Czech Republic, however, was a country affected by migration rather than immigration. A
2006 report from the European Industrial Relations Observatory warned that the Czech Republic
could suffer from “brain drain” from the migration of highly skilled labor to countries that would
offer higher wages and standards of living.35
The third expectation of the alternative hypothesis assumes that center-right governments
(e.g., in Italy and the Czech Republic) have tended to favor initiatives designed to stimulate
private-sector unemployment, while center left governments (e.g., in the UK and Spain) have
favored greater infusions of public funds to hire the unemployed directly. In fact, the center-left
governments of the UK and Spain have each used, to the extent they could, public funding to
employ more citizens within their respective economies. By contrast, Prime Minister
Berlusconi’s center-right governing coalition and the right-leaning government of Czech Prime
Minister Jan Fischer, respectively, have supported private sector reforms to stimulate
unemployment. In 2008, Prime Minister José Luis Rodríguez Zapatero of the center-left Socialist
Party “approved measures involving cash injections of 10 billion euros in an effort to invigorate
the economy. This program focuses on helping individuals, families, and companies hit by the
34
“Italy’s Immigrants Despair at New Laws,” BBC.com, 27 July 2009, Europe Section.
35
European Industrial Relations Observatory, Migration of Czech Workers Poses Risk of Brain Drain (2006),
<http://www.eurofound.europa.eu/eiro/2005/12/feature/cz0512102f.htm> (accessed May 2010).

18. Fraser 18
economic slowdown”36
The plan included measures to support the unemployed and hired 1500
career advisors to assist in increasing skill levels for these unemployed.37
Spain has also taken
measures to increase government spending, with Finance Minister Elena Salgado increasing the
value-added tax to 18% in July 2009, to fund the expansion of public spending.38
In the United
Kingdom, Prime Minister Gordon Brown of the left-leaning Labor Party also addressed the issue
with strong government stimulus. The Economist noted that “the Bank of England has …since
March 2007 injected £200 billion into the economy by purchasing assets with central-bank
money.”39
Their article also noted that the British government has not focused on private demand
and consumption to increase economic growth, and in turn, employment levels; but rather on
public spending to fight the crisis.
In Italy the government of center-right Prime Minister Silvio Berlusconi has privatized certain
elements of the economy, including Alitalia, the major Italian airline. The director of Italy’s
central bank, Fabrizio Saccomanni, stated in March that unemployment levels would decrease as
exports increase, signifying the government’s willingness to let the private sector handle the
recovery of unemployment rates.40
Finally, in the Czech Republic the center-right government
under Prime Minister Jan Fisher, a political independent, has focused on its advantage of using
the koruna to try to stimulate foreign investment. As noted above, the government has also relied
on its ability to run a higher deficit than the eurozone economies to address the situation of
unemployment. The Czechs are expecting exports to pick up to lead them out of the high levels
of unemployment, hoping that higher growth will lead to more jobs.
36
Villagomez and Carbonell, 2.
37
Loc. cit.
38
“The Mañana Syndrome: Spain’s Economic Woes,” The Economist, 25 March 2010, Europe Section.
39
“The Pain to Come: The British Economy,” The Economist, 25 March 2010, Briefings Section.
40
“Italian Unemployment Rate Rises as Recovery Fails to Create Jobs”, Business Week, 1 March 2010.

19. Fraser 19
Contradictory evidence was harder to come by, as it was clear that each of the policies of the
four EU Member States examined addressed the issues on ideological lines. Public stimulus
existed in each member state, but it was more heavily used to fund public sector initiatives by
Spain and the UK than by the Czech Republic or Italy.
The fourth expectation of my alternative hypothesis states that the impact of business, labor
and other relevant interest groups has tended to vary among these four countries. Labor unions
and their ties to specific parties have had a significant impact on the labor markets in each of the
four examined countries. In other cases, the private sector or international companies have
various levels of influence on the governing parties therefore having an impact on the policies
created to address the increasing levels of unemployment. In Spain, as noted above, the Zapatero
government has supported the favored the renewable energy sector in its stimulus efforts. Further,
as Reuters noted in an May 2010 article, “Spanish business association CEOE frequently
demands the government reform the country's labor market to make it more flexible, but trade
unions have said workers’ rights should not be made vulnerable.”41
The labor unions’ insistence
that the government focus on workers’ rights has hindered the ability for the government to
substantially reform the labor market.
The United Kingdom, as noted above, has a labor union movement that is decentralized from
policy-making and that does not take into consideration all of the macroeconomic factors causing
inefficiency in the UK’s labor market. In Italy the influence of businesses has overridden the
country’s historically active labor movement. Prime Minister Berlusconi has touted plans to
“spend at least 300 million euros on subsidies for the purchase of consumer goods such as home
41
Jonathan Gleave, “Spain April Unemployment Fall Leaked to Press,” 1 May 2010, World Section.

20. Fraser 20
appliances.”42
Last year he also promoted programs to subsidize new car purchases to assist the
Italian auto sector. In the Czech Republic, there was little evidence to support or contrast the
expectation.
Of the evidence that I found, nothing contrasted the expectation of my alternative hypothesis
that business, labor and other relevant interest groups have impacted Spain, The United Kingdom,
Italy and the Czech Republic in varying ways. More sufficient evidence in support of the
expectation probably exists; however, it proved difficult to come across.
The final expectation of the alternative hypothesis, noted above, suggests that the
governments of Spain, the United Kingdom, Italy and the Czech Republic, in addition to
cooperating at a multilateral level, have taken a number of measures on their own to address
increasing unemployment rates. Multilaterally, this is supported by each Member State’s usage
of the allocated funding by the ESF, through the EES. As noted above, in its latest report the
EEO found that in Spain the government has addressed unemployment levels with the passage of
measures to protect the unemployed in December 2009.43
The report also found that the Zapatero
government has worked with the opposition People’s Party to pass measures to stimulate the
renewable energy sector and to help small businesses increase their capacity for hiring.44
In the
United Kingdom, the EEO report found that the £200 million stimulus, noted above, also had
significant programs to address the problem of youth and recent graduate unemployment rates.
These programs come in the form of subsidies to employers to encourage the hiring of younger
42
Andrew Davis, “Italian Industrial Production Stalls on Rising Unemployment,” Business Week, 12 April 2010,
Business Exchange Section.
43
European Employment Observatory, EEO: Quarterly Reports Executive Summary (March 2010),
<http://www.eu-employment-observatory.net/resources/quarterly_reports_exec_summary/EN-March2010-
QRES.pdf> (accessed May 2010).
44
Loc. cit.

21. Fraser 21
jobseekers.45
In a document released by the British Government in late 2009, titled Building
Britain’s Recovery: Achieving Full Employment, the government outlines several plans to
address the problem. These plans include over 100,000 government funded training and job
opportunities, including guaranteed internships for those entering the workforce after graduating
university.46
In Italy, the EEO report found that there was a significantly lower relative percentage of GDP
spent on addressing the issue of unemployment.47
This is in line with the above expectation that
Italy’s center-right government has focused less on public spending and more on private sector
recovery. However, the report also found that Italy has created a monitoring and incentives based
approach for employers to hire more disabled and older members of the economy.48
The Czech Republic has focused on education and training to address its rising unemployment
rates, with several initiatives that provide subsidies to the private sector for educational and
technology training expenses that are funded by the ESF.49
I could find no evidence that contradicts the final expectation of my alternative hypothesis.
The evidence is supportive of my expectation that suggests that the governments of Spain, the
United Kingdom, Italy and the Czech Republic, in addition to cooperating at a multilateral level,
have taken a number of measures on their own to address increasing unemployment rates.
Overall, the evidence is consistent with my alternative hypothesis. The evidence supports the
assumption that varying national and domestic factors in EU Member States have prompted them
to pursue their own employment policies, independent of the EU. The expectations that the
45
European Employment Observatory, EEO: Quarterly Reports Executive Summary (March 2010).
46
Department of Work and Pensions, Building Britain’s Recovery: Achieving Full Employment (December 2009),
<http://www.dwp.gov.uk/docs/building-britains-recovery.pdf> (accessed May 2010).
47
European Employment Observatory, EEO: Quarterly Reports Executive Summary (March 2010).
48
Loc. cit.
49
European Commission, The European Social Fund in the Czech Republic (2009),
<http://ec.europa.eu/employment_social/esf/docs/cz_country_profile_en.pdf> (accessed May 2010).

22. Fraser 22
examined nations differ with respect to whether their increasing unemployment rates are due to
secular or cyclical causes, or have elements of both, are supported by the evidence. The
expectations that ideological factors and domestic concerns over the contribution of immigration
to unemployment levels have contributed to Member States’ individual employment policies is
also supported by the evidence presented. Finally, the expectation that Spain, the United
Kingdom, Italy and the Czech Republic have each taken it upon themselves to address the issue
of unemployment levels is strongly supported by the evidence presented to test this expectation.
V. Conclusions
The evidence that I have just presented is significantly inconsistent with my research
hypothesis that international factors have caused EU Member States to call for concerted actions
through the EU to address the problem of rising unemployment levels. The expectations that the
U.S. housing crisis and the world economic downturn have impacted the EU Member States’
unemployment rates negatively found support from the evidence, but only to an extent. The
evidence more strongly suggested that pre-crisis factors have impacted unemployment levels.
The expectations that leaders of Member States have called for concerted action and that the EU
has developed stimulus or other policies to address unemployment levels are not supported by
the evidence. The preponderance of evidence is overwhelmingly consistent with my alternative
hypothesis that suggests domestic and national factors have led EU Member States to pursue
their own employment policies to address their specific unemployment problems.
The bottom line is that domestic factors have overwhelmingly defined the corresponding
policies taken to combat rising unemployment levels by the governments of Spain, the United
Kingdom, Italy and the Czech Republic. Due to variances in the domestic structural and political
factors influencing the rise of unemployment rates in each country examined, their governments

23. Fraser 23
were more concerned with pursuing domestic solutions to address unemployment rather than
addressing the issue at the supranational level of the European Union.
VI. Scenarios
Given the variance in the unemployment problems that each EU Member State examined in
this research faces and the domestic political factors that influence policies to address
unemployment, it appears likely that all substantial policies to address unemployment levels,
such as government stimulus packages and taxation structures, will remain at the domestic level.
Although the EU has implemented the ESF and the new EU 2020 Strategy, these efforts target
educating unskilled labor and leave addressing unemployment causes and effects to the fiscal
policies of the respective EU Member States. If rising unemployment levels continue to develop
from systemic and domestic factors, then concerted EU action to address unemployment is likely
continue to be limited in scope and in interest for EU Member State governments to pursue.
VII. Recommendations
Based on my analysis, I suggest that Prime Minister Zapatero ought to focus his government’s
efforts on stemming the secular unemployment problems facing Spain, rather than focusing
solely on the crisis-related effects on unemployment levels. Primarily, I suggest that Spain
address on the efficiency of its labor markets by allowing for more labor market flexibility and
limiting the influence of its powerful labor unions. Prime Minister Zapatero ought to promote
economic growth to increase unemployment levels by slashing taxes and cutting excessive
spending on social programs. These policies would promote investment in Spain and would
increase exports. Finally, I recommend that the Spanish government take action to addresses the
issue of the surplus of unskilled labor in Spain by instituting more skills based programs through

24. Fraser 24
the ESF and by further reexamining polices to address the influx of unskilled immigrant labor
flowing into the country.

25. Fraser 25
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