Restrictive Macroeconomic Policies and Unemployment in the European Union

This paper looks at the impact the European integration process has had on the unemployment level of European Union member countries. While the persistence of relatively high unemployment in Europe is often attributed to supply-side factors, such as the rigidities of the labour market, this study contends that the major cause for the rise of unemployment in the EU has been the very macroeconomic policies of the EU itself. The paper argues that the continuous pursuit of deflationary policies and the macroeconomic constraint imposed first by the membership of the European Monetary System and, secondly, by the convergence criteria of the Maastricht Treaty, have been the real impediments to reducing unemployment.