Labour market rigidities can be said to cause unemployment in the UK and other OECD countries. They include employment protection polices, employment benefits, labour taxes, unions and wage determinations, imposing the minimum wage and the level of education the workforce have. They all exert different levels of influence on unemployment. In most of the OECD European countries unemployment has been rising in both the short and long term. The unemployment rate has risen by 8.4% between 1970 and 1996. In the UK however, unemployment is at it lowest since 1970. Italy's unemployment rate has steadily been increasing up until...
benefits in the UK are counter balanced by active policies to get people back into work. The high levels of union domination can also be said to play little part in unemployment as in UK and trade union coverage is limited. These factors alone do not cause unemployment but it is when they combined problems arise. Unemployment in Italy on the other hand can be said to be caused the by rigidities mentioned above. The Italians offers high tax rates, high employment protection regulations and low benefits and as a result they suffer from high unemployment rates in Europe.