To Cut Unemployment, Opt for Economic Freedom

Terry Miller / April 02, 2010

The Fundacion para el Análisis y los Estudios Sociales of Spain recently sponsored presentations on the 2010 Index of Economic Freedom (www.heritage.org/index) in Madrid and Barcelona. Discussion centered on Spain’s 18 percent unemployment rate, the highest in Europe, and its labor market regulations that are among the most severe in Europe.

According to the Index of Economic Freedom, the average labor freedom score for the members of the European Union is 60.0, on the Index’s 0-100 scale. Spain’s score, by contrast, is only 47.3.

The average unemployment rate for EU members was 6.2 percent in 2008 (the latest year for which we have complete data). Those with more labor freedom had lower unemployment rates (at 5.8 percent compared to a 6.6 percent rate in less free countries) The contrast in recession-plagued 2009 was even starker: EU members with more flexible labor markets averaged 7.9 percent unemployed; those with more rigid labor regulations averaged 10.1 percent unemployed. (more…)