In sum, over one third of Sweden's GDP is redistributed through transfer payments. Taxes place a wedge between the real purchasing power of wages and the effective cost of the worker to the employer. In Europe, the tax wedge averages 55 percent, with payroll taxes making up nearly as large a share as income taxes. Even this rate may be understated, as government training, employment, and early retirement schemes have suppressed the reported unemployment rate in Europe and many discouraged workers have dropped out of the workforce. Approximately 16 million people in the EU are looking for work.
Unemployment rates are particularly high in Europe for young entry-level workers.
In Italy, one-third of young people not in school are jobless. In some countries, the figure was even higher. Labor market inflexibility in Europe has also resulted in slow job growth. European countries have seen little sustained employment growth in recent years. Private sector employment, which grew in the U.S. by more than 70 percent between 1970 and 1998, has grown by considerably less than five percent in Europe.