The Strategist

Europe's Standard of Living: Prosperous and Poorest

05/14/2015 - 15:43

The World Economic Forum in cooperation with Mercer company prepared a fresh report on the development of human capital in the world - The Human Capital Report 2015. This is an annual global survey of countries ranked by the integral index of human capital (Human Capital Index). This index takes into account the multi-level life expectancy, literacy, education and longevity of the population totaling of 46 indicators.

The absolute leader of the rating in 2015 for the second time in a row became Finland. The country is followed by Norway, Switzerland, Canada and Japan.

Total rating includes 124 countries. They are evaluated by more than fifty indicators united in four main groups: education and training, physical and psychological well-being, employment, as well as infrastructure and social mobility. In the first, researchers wondered whether the authorities are able "to bring talent through education, skills development and their application in all stages of human life."

In 2013, the technique of has changed - the index, formerly known as the Human Development Index and calculated on a scale from "0" to "1", now, respectively, transformed into the Human Capital Index and is calculated on a scale from "0" to "100". Key criteria included in the index has not changed: the level of education, qualification of labor, employment and life expectancy. The report's authors argue that the old and new index have very high correlation. In other words, countries leading in the old methodology will lead in the new as well.

Mauritania, Chad and Yemen are at the very bottom.

Meanwhile, the labor market of the European Union, theoretically being united through the right of EU citizens to freedom of movement, is showing mixed trends, depending on the economic policy in specific countries. This increases the potential for migration from the south to the north and the center of the EU.

Grand Britain is one of the most prosperous countries of the EU. According to the British Office for National Statistics (ONS), published in late April, unemployment in Britain has decreased by 76 thousand man, to 1.84 million. This means that the unemployment rate fell to 5.6% - its lowest level since in July 2008, when the last global economic crisis had started. According to the ONS, in March 2015, the number of Britons receiving unemployment benefits decreased by 20.7 th. people to 772.4 th., which reduces the load on the expenditure side of the budget.

At the other end of Europe is Greece, which for five years has been living in a recession, and where the labor market situation is diametrically opposite. The country keeps not only the highest unemployment rate in the EU (25.7%), but also the highest level of long-term unemployment, for more than a year. According to Eurostat, in 2014, 73.5% of unemployed Greeks were unemployed for over a year. Even in 2013, the share of long-term unemployed amounted to 67.1%. Attica region, which contains the nation's capital of Athens and the port city of Piraeus, has the highest long-term unemployment among all regions in the EU - 77.3%. Western Greece is lagging behind too - there are people staying jobless for more than a year, that is, 76.7% of all unemployed.

- Long-term economic crisis, similar to what we see in the peripheral countries of southern Europe, forcing entire generations of people to be unemployed for a long time, sometimes it even extends over a lifetime. The presence of a substantial long-term unemployment worsens the situation with youth unemployment: school and university graduates cannot find work if their main competitors are older people that have been unemployed for rather long time. The situation becomes a vicious circle that encourages the unemployed to migrate to more prosperous labor market of other countries and has a negative impact on the local social life, said John Springford, a senior research fellow of the London Centre for Economic Reform.

Indeed, youth unemployment remains a serious problem for the EU, in spite of some of its decline over the past year and a half. In 2014, the highest unemployment rate among 18-25 year olds was recorded in Spain, where it reached 53.2%. In Greece, the youth unemployment rate last year was 52.4% (in 2013 - 58.3%). Epirus, the region in northwest Greece on the border with Albania, proved to be one with the highest youth unemployment - at 69.8%. According to the Commission, Epirus inferior on the socio-economic development not only to other regions of Greece, but even regions much poorer, such as Eastern European countries - EU members.

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