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The government is committed to improved access to psychological therapy. How big an expansion is necessary to meet the NICE guidelines on depression and anxiety, and how should it be organised?

"Unemployment, not productivity, is the problem in Europe. So unemployment does not reflect some general weakness of the European economy. If it did, we would also see poor secular productivity growth, which is not the case. Unemployment is a specific problem, having specific causes, and for which there are specific remedies. Many European countries have reduced their unemployment rates to United States levels or below, including some, such as Denmark, which have very high tax rates. It is precisely the variation of experience among the different countries, which helps us to understand what must be done by those large continental countries where unemployment remains so shockingly high. By the early 1990s the evidence already showed that the keys to reducing unemployment were welfare-to-work policies for the unemployed and more flexible wages. Those countries like Denmark, the Netherlands and Britain which acted on this evidence have halved their unemployment since then. Those which have not taken action have continued to have high unemployment, even at the peak of the European boom in 2000. In that year both France and Germany had record levels of vacancies despite massive unemployment - showing that the main reason for unemployment was a failure to mobilise the unemployed. Almost any job is better than being unemployed. Research on happiness shows that being unemployed is as bad for a person's happiness as being divorced, and three times worse than losing one third of your income. So it is good for unemployed people that, after a while, they should be expected to fill most types of vacancy. It is also important that after some period they automatically receive offers of activity, which they are required to accept rather than staying at home on benefit. This 'activation principle' has been a major factor in lowering unemployment in many countries. But this whole approach requires an active and energetic service which combines job search assistance and benefit monitoring. The Hartz reforms in Germany are a massive step in the right direction but they need to be energetically monitored and followed in other countries. Wage flexibility is also vital in regions where productivity is lower than elsewhere and needs to be adequately reflected in lower wages. This applies to east Germany, southern Italy and southern Spain. But other elements in the 'flexibility' package often advocated, such as lower job security and lower taxes, would make little difference and there is no need to abandon the whole European model in order to deal with the specific problem of unemployment." (author's abstract)

"Unemployment, not productivity, is the problem in Europe. So unemployment does not reflect some general weakness of the European economy. If it did, we would also see poor secular productivity growth, which is not the case. Unemployment is a specific problem, having specific causes, and for which there are specific remedies. Many European countries have reduced their unemployment rates to United States levels or below, including some, such as Denmark, which have very high tax rates. It is precisely the variation of experience among the different countries, which helps us to understand what must be done by those large continental countries where unemployment remains so shockingly high. By the early 1990s the evidence already showed that the keys to reducing unemployment were welfare-to-work policies for the unemployed and more flexible wages. Those countries like Denmark, the Netherlands and Britain which acted on this evidence have halved their unemployment since then. Those which have not taken action have continued to have high unemployment, even at the peak of the European boom in 2000. In that year both France and Germany had record levels of vacancies despite massive unemployment - showing that the main reason for unemployment was a failure to mobilise the unemployed. Almost any job is better than being unemployed. Research on happiness shows that being unemployed is as bad for a person's happiness as being divorced, and three times worse than losing one third of your income. So it is good for unemployed people that, after a while, they should be expected to fill most types of vacancy. It is also important that after some period they automatically receive offers of activity, which they are required to accept rather than staying at home on benefit. This 'activation principle' has been a major factor in lowering unemployment in many countries. But this whole approach requires an active and energetic service which combines job search assistance and benefit monitoring. The Hartz reforms in Germany are a massive step in the right direction but they need to be energetically monitored and followed in other countries. Wage flexibility is also vital in regions where productivity is lower than elsewhere and needs to be adequately reflected in lower wages. This applies to east Germany, southern Italy and southern Spain. But other elements in the 'flexibility' package often advocated, such as lower job security and lower taxes, would make little difference and there is no need to abandon the whole European model in order to deal with the specific problem of unemployment." (Author's abstract, IAB-Doku) ((en))

The article reviews the Swedish model in the context of international evidence on the determinants of unemployment. There are three main determinants. (1) How unemployed people are treated. Unemployment benefits available for long periods tend to encourage long-term unemployment. The humane alternative is to replace benefits for long-term unemployed people by a guarantee of work or training. This policy has served Sweden well, despite frequent arguments to the contrary. (2) How wages are determined. Where unions are strong, centralized is better than decentralized bargaining because it takes into account the common interest in low unemployment. Countries like Sweden which have strived for wage consensus have benefited. (3) High minimum levels of skill. Unless these are achieved, the solidaristic wage policy advocated in the Swedish model is bound to increase unemployment. Other proposed remedies for unemployment, such as lower employers' payroll tax, less employment protection, more work sharing and early retirement are unlikely to have much effect on unemployment.