Bigger government means a smaller private sector and less wealth to create innovation and jobs. From Daniel Lacalle at dlacalle.com:
The unemployment rate in the Euro Area fell to 7% in December and 6.4% in the European Union, compared with the United States at 3.9%. We cannot forget that these unemployment rates do not include furloughed jobs covered by unemployment retention schemes, which account for another 5 million workers waiting to return to normal activity.
After a fiscal stimulus plan of more than 5% of GDP in 2020 and another 4% in 2021 and the European Central Bank purchasing 100% of net issuances from most sovereigns, the recovery shows a concerning weakness. Furlough jobs are rising again, working hours are still below the pre-pandemic level and real wages are falling as inflation eats the recovery.
In December 2021, the youth unemployment rate was 14.9% in both the EU and the euro area.
These unemployment levels are high, but some member states have even higher jobless ratios. Spain has a 13% official unemployment rate with still 220 thousand furlough jobs, and the youth unemployment rate stands at 30%.
What these figures show is that high government spending and enormous employment retention schemes have not helped to get the European economy recovering faster or improve job creation compared to similar economic zones.
The economic recovery has been slow and the job creation even slower. Furthermore, a large proportion of the job recovery has been from the public sector. In Spain, for example, there are still 95k less jobs in the private sector than before the pandemic and 220k more in the public sector.