ABSTRACT
This chapter examines variations between European countries, highlights alternative routes and discusses the compatibility between maintaining generous social protection and improving employment. This standard interpretation was stimulated by the situation in the mid-1990s, when high unemployment was a nearly universal phenomenon in Europe. There are also other disturbances to the smooth functioning of markets which lead to higher structural unemployment and/or lower competitiveness. These include: over rigid employment protection; inflexible working hours; disincentives in the tax/welfare system; and overly easy access to unemployment benefits. Long-term unemployment also mirrors the job protection enjoyed by prime age men. As other means seemed inefficient, nearly all European countries came to adopt a series of policies aiming at a redistribution or reduction of labour supply. A common feature of the above strategies is the assumption that sustainable economic growth will over time be able to eliminate, or at least reduce unemployment.
