https://cpes.org.uk/om/files/original/9130428d388a92ee415fff1c95c6e343.pdf 03863a5a6b53f0d6555a79a856a2b326 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Title A name given to the resource Cambridge Economic Policy Review Volume 7 No 2 Text A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text. Text Any textual data included in the document Chapter 1 Unemployment and recession Since 1973 all countries of the European Community have experienced recession and rising unemployment. This chapter examines their impact on the Community and its member countries, assessing what has happened so far and what is likely to happen up to the mid-1980s. The first part of the chapter relates rising unemployment to trends in labour supply as well as to changes in the rate of job creation. We shall show that since 1973 the Community would have needed something like 6 million new jobs to provide for the large generation of young people born in the 1960s. In the event the recession has caused a decline in the total number of jobs and unemployment has become a major problem in all member countries. The second part of the chapter examines the impact of recession on real incomes and government finances. In most countries the growth of public services has been cut back and tax rates have been increased substantially in the face of rising government deficits. Nor has privatelyfinanced expenditure been protected. On the contrary in most member countries growth in business investment and privately-financed consumption has come to a standstill. 1.1 Unemployment, employment and labour supply The rise in unemployment in the Community since 1973 has been dramatic, particularly in the past two years. From 2V2 million in 1973 recorded unemployment drifted up by about l/2 million per year to reach 6 million in 1979. In the past two years it has increased by a further 3 million - l/2 million each in Germany and France, 300 thousand in Italy, well over 1 million in the UK and l/2 million in the smaller member countries. As a percentage of the labour force recorded unemployment was, in mid-1981, 5% in Germany, around 9% in France, Italy, Netherlands and Denmark, and about 11% in the UK, Belgium and Ireland. By 1985 we may expect a further increase of some 4 million, bringing the rate of unemployment up to 7% in Germany, 12% in most other countries and about 15% in the UK, Belgium and Ireland - a total of 13l/2 million recorded un- employment in the Community as a whole. The main contribution to the rise in unemploy- ment in the Community since 1973 has come, statistically, from an expansion of labour supply rather than from a fall in total employment. But, as we shall see in the next section, the fall in employment has been sharp in some sectors and it would have been far greater overall if there had not been a reduction in the growth of output per worker. Overmanning has therefore increased at the same time as recorded unemployment. Table 1.1 Recorded unemployment in the EEC 1973 1979 1981e 1985P (millions) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark 0.27 0.88 1.28 1.78 0.39 1.35 1.84 2.92 1.00 1.65 1.93 2.88 0.11 0.21 0.39 0.64 0.11 0.35 0.47 0.62 0.62 1.39 2.55 4.09 0.07 0.09 0.13 0.18 0.02 0.14 0.23 0.32 EEC 2.60 6.06 8.83 13.44 (per cent of labour force) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark 13 5 7 2 6 8 12 5 7 8 12 2 4 8 12 3 8 11 14 2 5 10 16 6 8 11 15 1 5 9 12 EEC 2 5 8 12 3 · The European Community: statisticaI definitions and sources Except where noted, data in the text and tables are drawn from accounts presented in the Statistical Appendix, based principally on Eurostat publications. EEC Data are totals or averages for nine countries (Germany, France, Italy, Netherlands, Belgium and Luxembourg, United Kingdom, Ireland and Denmark). Belgium Data are for Belgium and Luxembourg combined. Ireland Denmark Data are estimated from incomplete and often conflicting sources. 1981 e Data for 1981 have been estimated from incomplete indicators drawn from a wide variety of sources. Except where noted, data for 1985 are drawn from a base projection, extrapolating historical data on the assumption of broadly unchanged policies. 1975 PPS Trade and national accounts data are measured in terms of the 1975 PPS, a standard of purchasing power intended to be constant both through time and across countries within the EEC. Data have been converted from current price, national currency values by dividing with national currency price deflators for total domestic expenditure (base 1975=1.00) and then multiplying by Eurostat 1975 purchasing-parity exchange rates. One 1975 PPS is on average for the EEC as a whole equivalent to a 1975 ECU or EUA (European unit of account) and, at market exchange rates, to 1.24 1975 US dollars. It is also approximately equivalent in buying power to a 1980 £ sterling. Note that data measured in this way represent estimates of real value (in the sense of purchasing power). They are not conceptually the same as "volume' or "constant price' data since they incorporate relative price changes. Employment Employment data refer to the total number of persons engaged including self-employed, unpaid family and parttime workers. Value added Value-added data include indirect taxes and subsidies, with a pro rata imputation of taxes on imports to production sectors. Real income Income is generally measured after all taxes and transfers. The real income of a country is defined as GNP at market prices less net unrequited transfers paid abroad, divided by the deflator for total domestic expenditure and converted to PPS at a purchasing-parity exchange rate. Output Output data, exceptionally, represent the volume of production by different sectors. Series for the economy as a whole are estimates of GOP at constant market prices. Balance of payments Trade and balance of payments data are on a national accounts basis with imports of goods measured cit. Domestic expenditure excludes consumption by non-residents and includes residents' consumption abroad. The balance of payments on current account is equal to the difference between real national income and total domestic expenditure. 4 -----.. Table 1.2 Trends of unemployment, employment and population in the EEC (millions) (changes) Population Children Elderly Population of working age Employment Recorded unemployment Recorded labour force 1955 221.7 51.5 22.7 147.5 97.7 3.7 101.4 Recorded labour force as% of population of working age Recorded unemployment as % of recorded labour force 68.7 3.6 1973 255.7 60.3 32.9 162.5 104.6 2.6 1981e 260.8 53.3 36.3 171.2 103.3 8.8 107.2 112.1 (per cent) 66.0 65.5 2.4 7.9 1985P 263.2 50.7 34.8 177.7 102.1 13.4 115.6 1955-73 +34.0 +8.8 +10.2 +15.0 +6.9 -l.l 1973-85P +7.5 -9.6 +1.9 +15.2 -2.5 +10.8 +5.8 +8.4 65.0 -2.7 -l.O 11.6 -1.2 +9.2 Note: Population projections based on The economic implications of demographic change in the European Community: 1975-1995. Report published by the Commission of the European Communities, Directorate-General for Economic and Financial Affairs, Brussels, June 1978. The background.' job-creation in the 1950s and 1960s Table 1.2 sets the main trends of employment and labour supply in historical perspective. From the mid-1950s to 1973 the Community's labour force grew quite slowly. The total population increased by 34 million or 15% but much of the increase came from a boom in the number of children who were as yet too young to enter the labour force. The population of working age increased by 15 million or 10% and something like a half of this increase was due to immigration, particularly from Eastern Europe, Algeria and Turkey. Despite immigration, the labour force increased by a mere 6 million in 18 years. Several factors combined to hold down the numbers seeking work - earlier retirement, the expansion of higher education, extended years at school and the shift of rural families to the cities. Thus the success of employment creation in the 1950s and 1960s is not to be measured so much by the absorption of a small increase in total labour supply as by the redeployment of some 12 million workers leaving agriculture, coal-mining and, in France and the UK, the armed forces (see Table 1.3). Between 1955 and 1973 the number of jobs in manufacturing rose by 3 million, in construction by 11/2 million, in market services by 8 million and in public (non-market) services by 5 V2 million - a grand total of almost 18 million additional jobs found over the 18-year period. It was this which kept unemployment down to between 1% and 3% in most parts of the Community up to the early 1970s. The rate of job creation was comparatively low in the UK which, however, did not have a large agricultural labour force to redeploy. It was low also in Ireland and Italy from which large numbers of workers left to seek employment elsewhere - in the USA, the UK, Germany, France and Belgium. The need for job creation after 1973 Since 1973 the number of workers leaving agriculture has been comparatively small because the agricultural labour force had already contracted so much. Less than 2 million jobs would have been needed in the last eight years to accommodate falling employment in agriculture and coal-mining. On the other hand the labour force as a whole has started to expand rapidly as children born in the 1960s come of age. The process has been reinforced by rising participation rates among women (now having smaller families). Thus between 1973 and 1981 the recorded labour force rose by about 5 million - and it would have risen more if lack of jobs had not discouraged many people, the elderly and married women in particular, from seeking work. The expansion of 5 ... ------------------------~ Table 1.3 Job creation 1955-73 Fall in Increase Reduction employment in labour in unemployment in agriculture force and fuel and power (thousands) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC 2,552 2,756 3,655 263 326 988 180 161 10,881 1,835 2,131 -1,044 751 349 1,607 -78 329 5,880 800 -235 908 -69 5 -375 -10 45 1,069 Jobs created in manufacturing, construction and services (%of 1955 labour force) (thousands) 5,187 4,652 3,519 945 680 2,220 92 535 17,830 20.7 23.8 16.2 23.4 18.4 9.2 7.7 26.4 17.6 the labour force will continue at much the same rate at least up until 1985, when there will be another 3 million looking for jobs. Only in the late 1980s will the fall in birth rates registered in the early 1970s stabilise the total population of working age. The phenomenon of high birth rates in the 1960s was common to all member countries of the Community. At the peak, in 1964, the life-time fertility rate ranged between 2.5 children per woman in Germany and 3.3 children per woman in the Netherlands. In all countries, therefore, the potential labour. supply is now expanding as the new generation comes of age. By 1985 the recorded labour supply will probably have risen by 10-12% in most member countries (see Table 1.4). Germany, exceptionally, has so far shown a fall in labour supply caused by early retirement and a reduction in the number of immigrant workers. The UK has recorded a comparatively small increase because, in the past two years, potential workers have been discouraged by the shortage of jobs from looking for work and therefore from registering as unemployed. Italy, at the other extreme, is experiencing a particularly rapid increase in its labour force as fewer people go abroad to find work, as migrant workers return and as participation rates rise in parts of the South. Allowing for the small continuing decline in employment in agriculture, the cumulative number of new jobs needed to hold unemployment down to its 1973 level now amounts to about 7 million in the Community as a whole and will reach some 12 million by 1985. The rate of net job creation in manufacturing, construction and services would, therefore, have had to be the same since 1973 as it was between 1955 and 1973- i.e. Table 1.4 Labour force increases 1973-85P Recorded labour force 1973 Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC 26.92 21.70 20.66 4.79 4.03 25.65 1.12 2.36 107.24 Changes 1973-8Ie 1981 e-85P (millions) -0.25 +1.64 +2.23 +0.35 +0.33 +0.32 +0.08 +0.23 +0.29 +1.09 +1.19 +0.16 +0.18 +0.36 +0.01 +0.12 +4.91 +3.42 Increase 1973-85P (per cent) 0 13 17 11 13 3 8 15 8 6 ------------------------~-~-~ Table 1.5 Labour supply and net job creation 1973-85P Increase in labour force plus fall in employment agriculture and fuel and power 1973-85P Net jobs created in manufacturing, construction and services 1973-81 e I98I e-85P (millions) Shortfall in job creation I973-85P (millions) (% of 1973 labour force) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC 0.82 3.47 4.08 0.58 0.57 0.86 0.17 0.40 I0.93 -0.7I 0.72 1.74 O.Il 0.01 -1.50 0.06 0.04 0.47 O.OI 0.23 0.46 -0.07 0.05 -l.II -O.OI 0.05 -0.39 1.52 2.52 1.88 0.54 0.5I 3.47 0.12 0.03 I0.85 6 I2 9 II I3 I4 II I3 10 about l million per year. The distribution of those jobs between member countries would have had to be rather different from that before 1973 because earlier patterns of migration were no longer sustainable. Germany needed a far lower rate of job creation but Italy and Ireland needed a much higher rate than before. In the event the net number of jobs created since 1973 in the Community as a whole has so far amounted to a bare V2 million, rather than the 7 million needed. It is very doubtful whether there will be any net job creation at all in the next few years. The main reason for the lack of jobs has been an extraordinary fall in manufacturing employment which has been continuous since 1974 and particularly intense in the past two years (see Table 1.6). Over 4 million jobs have been lost in manufacturing and a further 2V2 million may easily be lost by 1985. 40% of the jobs lost so far have been concentrated in one country - the UK- and a further 30% in Germany. In both these countries total employment has therefore fallen substantially. In the Netherlands, Belgium and Denmark the loss of jobs in manufacturing has been large in relation to their size and total employment has barely risen. Despite the recession, employment in services has continued to increase in all countries since 1973. In general the net increase in service jobs has amounted to between 6 and 9% of the labour force. In the UK, uniquely, employment in market services has fallen in the past two years, compounding the loss of jobs in manufacturing. Overall, total employment in the Community has fallen slightly and the number recorded as unemployed has risen by more than the whole increase in the labour force. Table 1.6 Job losses in manufacturing 1973-85P Reduction in manufacturing employment l973-8Ie l98I e-85P (millions) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC l.l9 0.061 0.01 0.27 0.28 1.76 O.OI 0.10 4.22 0.75 0.32 0.24 0.14 0.10 0.84 0.02 0.05 2.47 l973-85P (% of total 1973 labour force) 7 4 I 9 9 10 3 6 6 7 Table 1.7 The sectoral incidence of recession in the EEC Agriculture: output terms of trade Fuel and power: output terms of trade Manufacturing: output terms of trade Construction: output terms of trade Market services: output terms of trade Non-market services: output terms of trade Whole economy: output terms of trade 1955-73 2.1 -1.1 5.8 -2.3 5.8 -1.6 4.2 1.5 4.8 0.5 3.1 2.6 4.6 0.0 1973-81e l.O -3.2 3.1 1.1 0.6 -0.7 -1.2 0.2 2.6 -0.4 2.4 0.7 1.7 -0.3 (growth rates, % per year) change 1973-81e compared with 1955-73 -1.1 -2.1 -2.7 +3.4 -5.2 +0.9 -5.4 -1.3 -2.2 -0.9 -0.7 -1.9 -2.9 -0.3 Productivity and employment in the recession The recession since 1973 has sharply reduced the growth of all major sectors of the economy with the exception of fuel and power. Most sectors have suffered a much slower growth in the volume of demand for their output as well as a deterioration in relative prices or terms of trade (see Table 1.7). The manufacturing sector has been particularly hard hit because of the cyclical volatility of demand for its products. Between 1973 and 1975 manufacturing output fell by 5% in the Community as .a whole and by 8V2% in the UK. From 1975 to 1979 there was a partial recovery but output still rose by 2% a year less than before 1973. Since 1979 there has been another fall of 4% in manufacturing output in the Community as a whole with a 15% collapse in the UK. Even Ireland and Italy, in which manufacturing output grew rapidly (6-7% a year) during the 1975-79 upturn, experienced some fall in output in the 1973-5 and 1979-81 downturns. Overall, the growth of manufacturing output in the EEC has averaged only V2% a year since 1973; in the UK the level of manufacturing output has fallen by nearly 20%. Although the growth of total output has been reduced by an average of 3% a year, the rate of change of total employment has fallen by less than 1/z% a year. Most of the reduction in output growth has been absorbed by a slowdown in the rate of increase in productivity which averaged 4-4 1/z% a year between 1955 and 1973 and has fallen to less than 2% a year since 1973. The slowdown in productivity growth was substantial in the two largest sectors: in manufacturing it fell from 55 Vz% to 21/z% a year and in market services it fell from 3-3 1/z% to l'h% a year (see Table 1.8). Table 1.8 Growth in output, employment and productivity in the EEC (growth rates, % per year) 1955-65 1965-73 1973-81 e Change 1973-81 e compared with 1965-73 Whole economy Output 4.7 4.6 1.7 -2.9 Employment 0.6 0.2 -0.2 -0.4 Output per head 4.1 4.4 1.8 -2.6 Manufacturing Output 6.0 5.5 0.6 -4.9 Employment l.O 0.0 -1.8 -1.8 Output per head 4.9 5.6 2.5 -3.1 Market services Output 4.7 4.8 Employment 1.5 1.3 Output per head 3.2 3.5 2.6 -2.2 1.1 -0.2 1.5 -2.0 8 If the stagnation of output had not been accompanied by a slow-down in productivity growth, employment in all member countries of the Community would have fallen substantially. In most countries employment would by 1981 have been some 15% lower than it actually was and unemployment would have been two or three times more severe. In manufacturing the reduction in productivity growth is primarily a phenomenon of excess capacity caused by the unexpectedly slow expansion of markets and sales. In nearly all member countries the fall in manufacturing employment, although large, has been cyclical and has moved in accord with behaviour in previous cyclical downturns. But if the recession persists the fall in employment may be intensified as companies seek a more permanent adjustment and as Governments withdraw temporary subsidies designed to limit the number of job losses. The reduction in productivity growth in services is less easy to explain. Why did employment continue to rise almost uniformly, regardless of changes in the growth of output and value added? Unfortunately the phenomenon is most pronounced in the least identifiable parts of the service sector (generally labelled 'other services' in the available statistics). In distribution and transport, while productivity growth has slowed down markedly, this has not been enough to prevent a fall in employment growth; in 'other services' employment has continued to grow at about the same rate as it did before the recession. Without more investigation we remain very unsure about whether, and under what conditions, service employment will continue to increase in the future. The present level of employment in the Community appears somewhat precarious since it owes so much to a reduction in the growth of productivity, the causes of which are not fully understood. 1.2 Real incomes in the recession We now turn to consider the consequences of the recession for real income and expenditure. Our concern here is not with how far financial policies have themselves aggravated or alleviated the recession (this will be discussed in Chapter 3) but simply to examine how government and private sector income and expenditure have changed in the recession. As will be seen from Table 1.9, the slow-down in the growth of real national income since 1973 has been pronounced throughout the Community. In the original six member countries, real income has grown by almost exactly 31/z per cent a year less than in 1955-73, bringing growth rates down from 5% to 11/z% a year. In the UK and Ireland the slowdown has been somewhat less- a little under 3% a year - as these two countries benefited, respectively, from North Sea oil and the Community's agricultural policy. In Denmark, real income growth has collapsed from 5% to a mere 1/z% a year. The reduction in growth of real income in the Community is attributable in part to slower growth of output and in part to terms-of-trade losses caused primarily by the rise in world oil prices. As Table 1.10 shows, the terms-of-trade loss since 1973 has averaged under 1/z% a year for the Community as a whole (though up to I% a year for countries other than the UK and Germany). But the principal cause of low real income growth has been the slow growth of output which has averaged between 11/z% and 2Vz% a year in most countries as compared with 4 1/z-5 1/z% a year before 1973. Given, also, what has happened to population growth, which has by no means been uniform across the Community, low growth rates have meant virtual stagnation of per capita real income in Denmark, Ireland and the UK. In Belgium and Table 1.9 The slow-down in growth of real income 1955-73 1973-81 e Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC 5.1 5.4 5.2 4.7 4.2 3.0 4.2 4.8 4.6 1.7 1.9 1.6 1.1 0.7 0.2 1.6 0.4 1.3 (growth rates, % per year) change 1973-81e compared with 1955-73 -3.4 -3.5 -3.6 -3.6 -3.5 -2.8 -2.6 -4.4 -3.3 9 Table 1.10 Growth of output and real income per capita 1973-Sie Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC Output growth Terms of trade and transfers Income growth 1.9 -0.2 2.4 -0.6 2.3 -0.6 1.9 -0.7 1.4 -0.7 0.1 0.1 3.2 -1.6 1.4 -1.0 1.7 -0.4 1.7 1.9 1.6 l.l 0.7 0.2 1.6 0.4 1.3 Population growth -0.1 0.4 0.5 0.7 0.2 0.0 1.5 0.3 0.2 (%per year) Growth of income per capita 1.8 1.4 1.1 0.4 0.5 0.1 0.0 0.1 1.0 the Netherlands the per capita growth rate has averaged a bare Wfo a year. Only in Germany, France and Italy has it been maintained at more than l% a year. There are risks that continued low growth in the ~ommunity a~ a whole could in future imply sigmficant falls m per capita real income in some member countries. Neither the Netherlands nor the UK can count on rising production of natural gas and oil to sustain their position as in the 1970s. Irel~nd also is vulnerable because of its rapid populatiOn growth and because it can hardly expect to gain more than at present from the Common Agricultural Policy. It is quite likely that growth of per capita income will in future be confined to the more robust member countries while those which received 'windfall' gains in the 1970s suffer complete stagnation or absolute decline (see illustrative projections in Table l.ll ). Table 1.11 Projected growth of real income 198Ie-85P (growth rates, % per year) Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark EEC Real Population Real mcome income per capita 2.0 2.4 2.1 -0.1 2.0 -0.4 0.1 0.4 -0.2 0.4 0.4 0.5 0.1 0.1 1.3 0.3 2.2 2.0 1.6 -0.6 1.9 -0.6 -1.2 0.1 1.5 0.2 1.3 10 Trends in expenditure In any one year the growth of total expenditure in the Community and individual member countries can and does exceed or fall short of the growth of real income, the discrepancy being reflected in the ~xternal balance of payments. After oil price mcreases reduced the Community's real income in 1974 and again in 1980, internal spending was on both occasions sustained at the expense of a widening balance-of-payments deficit. But discrepancies between growth of real income and growth of expenditure rarely persist for long because they would otherwise give rise to severe and increasing financial problems. Taking the period since 1973 as a whole, therefore, the average growth of expenditure in the Community and in each member country has been reduced by almost exactly the same amount (just over 3% per year) as the growth of real income. Moreover, as Table 1.12 shows, the slow-down in growth of expenditure has impinged on governments and on private sectors alike. The slow-down in growth of total expenditure was, however, super-imposed on differential tre~ds betwee~ government and private spending wh1ch have existed since the 1950s. In particular social security and other transfer expenditure by governments has grown exceptionally rapidly because of ~he rising number of elderly people in the populatiOn and because of the need to improve standards of provision. This differential trend in !avour of soci~l security and other transfer spend~ng has been remforced since 1973 by the sharp rise m unemployment. Up to 1973 government spending on goods and services, also, was rising as a share of total expenditure and income. This differential trend has now in general been eliminated. Nevertheless ~he pressure of social security and transfer spendmg has meant that total government expenditure has continued to grow some 2% a year faster than aggregate real income. One consequence has been a general expansion of government deficits. But Table 1.12 The slow-down in growth of real income and expenditure in the EEC Share of 1973 real income (per cent) Growth rate 1955-73 1973-81 e (% per year) Real income Total expenditure 100.0 99.8 4.6 4.6 1.3 1.5 Balance of payments +0.2 - - Net government income 32.8 6.1 2.7 Government spending goods and services 20.3 5.7 2.5 social security and other transfers 14.1 7.2 4.7 total 34.4 6.3 3.5 Government financial balance -1.6 - - Private income excluding government transfers 67.2 4.0 0.6 Privately-financed expenditure 65.4 3.9 0.3 Private financial balance +1.8 - - Change 1973-81e compared with 1955-73 -3.3 -3.1 - -3.4 -3.2 -2.5 -2.8 - -3.4 -3.6 - this has only financed a small part of the growth in government spending. The remainder has come from a continuously rising net burden of taxes and social security contributions as a share of total real income. Within the context of a marked slowdown in aggregate income, the outcome has been a very low growth rate of private income (other than social security and transfer receipts) and a correspondingly low growth rate of privately-financed expenditure. The situation has been similar in all member countries (see Table 1.13). Since 1973 government expenditure on transfers has grown by about 5% a year in all countries except Italy (3% a year) and Denmark (6% a year). Government expenditure on goods and services has shown more variation with average growth rates ranging from only Yz% a year in the UK to 4% a year in Ireland and Denmark. Average net tax rates have increased everywhere, though least in Germany and most in Table 1.13 Growth of government and private expenditure 1973-Ste (growth rates, % per year) Government expenditure Government expenditure on goods and services on transfers Privately-financed expenditure Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark 2.9 3.3 3.2 2.3 3.9 0.6 4.0 3.6 4.5 1.3 5.5 0.5 3.1 0.8 5.9 0.1 4.8 0.2 4.9 -1.4 4.7 2.0 6.0 -2.3 EEC 2.5 4.7 0.3 11 the UK (see Table 1.14). Privately-financed expenditure has grown significantly only in Germany and Ireland and it has fallen sharply in the UK and Denmark. Table 1.14 Net taxation* as a share of total income (per cent) 1973 1981e Increase 1973-81 e Germany France Italy Netherlands Belgium United Kingdom Ireland Denmark 35.8 36.1 0.3 34.9 39.7 4.8 26.0 30.3 4.3 41.3 46.7 5.4 31.8 36.9 5.1 29.3 35.2 5.9 26.9 27.7 0.8 41.3 43.6 2.3 EEC 32.8 36.5 3.7 * Total taxes plus social security contributions less subsidies and net interest payments. If recession continues the dilemmas of governments will become more acute in the next few years, especially in member countries with stagnant or falling per capita income and with high and rising unemployment. Many governments are faced with the stark choice between maintaining standards of public provision and continuing to protect the under-privileged at the cost of further increases in already high tax rates, or seeking to restrain the tax burden at the expense of cuts in the quality of public services and in the real value of social security benefits, which would bear harshly on those who are already least well-off. In the Community as a whole maintenance even of post1973 trends in public spending with broadly unchanged government deficits could well push up the average tax burden by another 10% (from 36% of income to 40% of income) over the next four years. In these circumstances there would be little scope for growth of privately-financed expenditure. Evidently, the dilemma will be still more acute in those countries with the most rapidly rising unemployment, especially if their aggregate real income declines. 12 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Title A name given to the resource Chapter 1 Unemployment and recession Creator An entity primarily responsible for making the resource Iain Begg Francis Cripps Terry Ward Source A related resource from which the described resource is derived Cambridge Economic Policy Review Volume 7 No 2, pages 3 - 12 Date A point or period of time associated with an event in the lifecycle of the resource December 1981 Contributor An entity responsible for making contributions to the resource Michael Anyadike-Danes Graham Gudgin Barry Moore John Rhodes Roger Tarling