In Western Europe, the average is 10 percent. Causes of High Unemployment and Low Wages Inadequate economic growth during the past two decades lies at the heart of the employment problems of industrialized countries, even though these problems take different forms in the United States, Japan and Western Europe, the report says. There also appears to be no doubt that slow growth in itself has been a major cause of the structural problems of the labour market. External shocks such as the two oil crises, insufficient adaptation to structural change and short-sighted domestic policies have also played a role. There is therefore room for some expansion without an excessive fear of resurgent inflation.
Growth is the driving force behind the reduction of unemployment.
In the United States, the slowed growth rate has essentially taken the form of an abrupt halt in the rise in individual incomes, as a result of the slow-down in labour productivity gains. On the other hand, the number of jobs rose, keeping unemployment low, at the expense of wage increases. In Europe, the fact that productivity gains remained at a more constant level meant the decline in growth was reflected in an upward trend in unemployment, but worker's pay kept rising, although at a lower rate. Moreover, their trade with the developing countries, especially with the DAEs, has been in balance or in surplus, which means that such trade tends to be job creating rather than job destroying. G7 countries should instead concentrate on high technology industries and the jobs that they create, because it will take many decades before the developing world can hope to catch up in these fields.