Ten days ago on November 30, I wrote in my article Average unemployment higher than ever in Europe that the credit-crisis had been extremely bad for the employment situation in the PIIGS countries, but left the strong Euro-countries virtually untouched.
I’m afraid, like I stated in earlier articles, that in the coming months this situation is going to change dramatically in The Netherlands and Germany.
Both countries are enduringly in the situation where the production and output of the manufacturing, non-financial services and agricultural industries (The Netherlands) are much too high for internal consumption solely. Both countries therefore have a vast export surplus.
German industrial zones like the Ruhrgebiet, Frankfurt am Main and the auto-cities (a.o.) Wolfsburg, Stuttgart, Munich and Rüsselsheim rely all heavily on producing and exporting their goods and services to other (European) countries.
And the Dutch ports of Rotterdam, Amsterdam en Eemshaven are totally reliant on the imports, reassembly & transits and exports of goods to the other European countries as their reason of existence.
Large Dutch industrial zones, like Chemelot (chemical industry), the Hoogoven terrain (steel mills) and the Brainport around Eindhoven (Dutch Silicon Valley) also produce much more goods and services than would be necessary for The Netherlands alone.
This makes The Netherlands and Germany very vulnerable for a slump in the exports to the other Euro-countries. And the enduring Euro-crisis and the increasing pressure on the PIIGS countries make such a slump more and more plausible.
And then for The Netherlands there is the growing problem of the top-heavy Dutch banking industry. This industry is still much too large for The Netherlands. Only the four Dutch system banks (ING Group, Rabobank, ABN AMRO and SNS Reaal) have already a balance sheet total of €2.44 trn, compared to a Dutch GDP of only €768 bln (318% of GDP).
Although immediately after the credit crisis the Dutch system banks shrunk their balance sheets, now these banks are increasing their balance sheets and their leverage again. The current weighted average leverage rate for these system banks is 26 and increasing (leverage for ING: 27, Rabobank: 16, ABN AMRO: 36 and SNS Bank: 44).
This high and growing leverage makes the Dutch banks (and thus the Dutch government) extremely vulnerable for banking crises and for situations where the quality of assets lies under fire and there is little mutual trust between the banks (right now). This mistrust has a devastating effect on refinancing operations.
Banks confront these problems mostly by trying to save money. They do this by laying off personnel and stopping projects, which has a strong negative effect on employment in The Netherlands. ING Bank was the first with a mass lay-off of 2700 full time jobs and the other banks might follow soon.
The last circumstance that might fire up unemployment in The Netherlands next year are the increasing austerity measures that will be taken by the Dutch government to stem the financial consequences of the credit crisis.
Yesterday´s news spoke of €10 bln in extra austerity measures on top of the original € 17bln for the next three years that were already announced one year ago. This will not help the unemployment situation at all.
Unemployment statement Central Bureau of Statistics (www.cbs.nl)
Unemployment has risen again since the summer of 2011. In the third quarter of this year, 422,000 people in the Netherlands were unemployed. The increase was caused mainly by people who did not have a job - or worked for only a few hours a week - and were not looking for work.
Compared with twelve months ago, more people have started to look for a job. In the third quarter of 2011, 163,000 unemployed people did not belong to the labour force in the preceding quarter. This is the equivalent of nearly 39% of the unemployed. They had not been looking for work or were not available to start a job in the short term. In the same quarter of 2010 this was the case for 34% of all unemployed.
In addition to a larger inflow into unemployment, there was a also a smaller outflow from unemployment in the third quarter of this year. Fewer unemployed people than twelve months previously found a job of at least 12 hours a week: 96,000 in the third quarter of 2011, just over 24% of those unemployed in the second quarter. In the third quarter of last year, 117,000 unemployed found work, accounting for nearly 27% of the unemployed in the previous quarter.
Just as in the third quarter of 2011, the number of unemployed also rose strongly in the first quarter of 2009. In that quarter, however, it rose because a large number of people lost their job. The inflow of people who were not in the labour force decreased slightly, on the other hand.
At first sight, this data doesn´t look so bad, as most new unemployed are probably students freshly out of college and university. But the third paragraph might be a warning signal that the situation on the labor market is deteriorating.
And there was more bad news in the media. Here are some messages from the last two weeks alone.
ING Economic Bureau (link in Dutch)
The ING Economic Bureau expects in 2012 a further increase of unemployment in all Dutch provinces. In the second half of 2012 a trend of soaring unemployment started in combination with a shrinking economy. Regional differences are big. In the province of Groningen unemployment will presumably exceed 9%. Also Zuid-Holland and Drenthe have an above average unemployment. Zeeland is an outlier with a forecasted unemployment of only 4%, well under the expected national average of 6.3% for 2012 (5.4% in 2011).
|Dutch forecasted unemployment in 2012. |
Source: ING Economic Bureau
Click to enlarge
Telegraaf: Mass lay-offs in education (link in Dutch)About 5000 teachers will be laid-off as a consequence of austerity measures on ´tailored education´ for physically and mentally handicapped children. Tailored education is a system of special education that takes place within normal schools; the follow-up for special education.
This was found by yet undisclosed research, ordered by the Ministry of Education, the general education organization and the labor unions. During the last months there already has been heavy speculating on the consequences of the austerity measures for special education.
BNR: Tom Tom scraps 457 jobs (10%) (link in Dutch)
TomTom scraps 457 jobs. That is about 10% of the total base of personnel. The manufacturer of navigation equipment is going to reorganize heavily. This will be realized by 255 forced lay-offs and an natural outflow of personnel that will not be replaced.
RTL Nieuws: Telegraaf Media Groep scraps 350 jobs (12%) (link in Dutch)
The Telegraaf Media Groep is once again cutting hard in the number of jobs. After the 2008 mass lay-offs where 500 full time jobs disappeared, the company now slashes 350 jobs.
I expect much more of these messages in the coming year and I expect unemployment to rise well above the 6.4% that was announced for 2012 by the ING Economic Bureau. I expect this recession not to be a mild one, but a heavy one and I expect debt destruction to be the keyword for 2012. On my radar is a Dutch average of 8.0+% for 2012. Of course, I hope I´m wrong!