IN THE YEAR of economic distress ahead, it is going to be important for Americans to keep it in mind that conditions are a good deal worse in Europe than here. Unemployment in Western Europe is now in the same range as it is in the United States. But most forecasts show the American rate rising very little more before it begins to fall sometime next year. The same forecasts warn that European unemployment will keep rising steadily into the mid-1980s.
West Germany's unemployment rate was under 1 percent most years until the oil crisis of 1973, the point from which the present dislocations can be measured. German unemployment is now over 8 percent and it is likely to be around 10 percent by March, when the German elections are to be held.
Every six months the OECD--the Organization for Economic Cooperation and Development, the international agency that is the economic analyst for the world's rich industrial countries--publishes a forecast, and the figures that appeared this week were unusually somber. The prospect for general recovery it saw last July has faded. Japan's economy will continue to expand, although at a speed that is, by Japanese standards, modest. The American economy is likely to begin growing again early next year. But the OECD warns that "unemployment in Europe is projected to rise by nearly one million every six months" through next year and into 1984. "The longer slow growth persists in Europe, the greater the risk that it will become self-perpetuating."
The explanation for Europe's unhappy outlook begins with demography. Reflecting the low birthrates of the postwar years, the numbers of people in the labor force have risen little or, as in the case of Germany, not at all--until very recently. Since European countries, unlike the United States, were under no pressure to create more jobs for a rising population, European labor practices became, by custom and law, highly inflexible. But birthrates began to rise in the 1960s and these extremely productive but rigid economies are now confronted with a surge in demand for employment.
Meanwhile, labor costs remained fairly stable in the United States. But they rose fast in Europe, with the rapid expansion of elaborate systems of social benefits that were usually financed through payroll taxes that make it expensive for employers to hire.
Economies grow and prosper by their ability to keep adapting to new challenges. Currently, it is the Asian trading countries that seem to be adjusting most rapidly to the worldwide turbulence of the past decade. The United States is somewhere in the middle of the scale. For Europeans, with their elaborate and not-very-flexible social legislation, the question is whether they can respond fast enough to escape the prolonged period of economic loss, political tension and declining standards of living that otherwise lies ahead of them.