SPECIAL REPORT

Posted Sunday, September 25, 2005; 14.16BST
It was a tough lesson — but it worked. For the past 20 months Jensen, now 24, has been in a full-time job at an anti-rust treatment shop. He found the job himself, and the state subsidized his new employer for the first six months. He hopes it will be a permanent position, but even if it isn't, something fundamental has changed: Jensen swears he'll never be unemployed again. "It's like emerging into the sunlight from a slough," he says.

This tough-love treatment of Denmark's unemployed youngsters — a policy that labor-market expert Per Kongshoj Madsen calls the "the Sicilian option" because you can't refuse offers you are made — is now increasingly the norm in Europe, endorsed even by governments that are traditionally friendly to labor. In Germany, Chancellor Gerhard Schröder introduced a big reform of unemployment benefits that slashes payments to young people who don't shape up. And even the French government is now talking about following suit. "People on benefits don't have sufficient incentive to take up a job," Villepin said last month.

Inevitably, such moves are politically controversial and often deeply unpopular. Many West Europeans regard the shift as an outrageous attack on hard-won social advances gained over the past half-century. In France, traditionalists denounce the "Anglo-Saxon" model — a key point among those who voted against the European constitution in May's referendum. In the German elections, the Left Party — a union of east German ex-communists and former Social Democrats disillusioned with Schröder's policies — polled almost 9% by promising a more social and painless solution to the nation's work crisis. One in four voters in the depressed eastern part of Germany, where the 18% unemployment rate is almost double that of western Germany, cast their ballot for the Left Party.

And if Schröder's Social Democratic Party does end up governing in a "grand coalition" with the Christian Democratic Union of Angela Merkel and its Bavarian sister party, the Christian Social Union — still one of the likeliest outcomes of the vote — some analysts say the big parties will have learned their lesson and won't push for even more radical measures. "Labor markets are the area that will suffer the most from a grand coalition," says Barbara Böttcher, a German economy expert at Deutsche Bank in Frankfurt. Yet it's another sign of the times that, even in Germany, all the mainstream parties put further labor reform in their election programs.

Driving such shifting attitudes is a stark reality: over the past two decades, Europe's overall growth rate has slowed so sharply that even in good periods only relatively few new jobs are created. Charts showing unemployment in the European Union look like an unending staircase. With the exception of two brief periods, there's a step up for every period of weak growth as more people lose their jobs, but only a flattening off — rather than a step down — for each period of recovery before the next step up. And now there's a new specter knocking at Europe's door: globalization.

Western Europe suddenly seems ill equipped to face up to the challenges of a fast-changing world. It can't begin to compete with Eastern Europe on labor costs, let alone with China or India, and others are catching up and overtaking its once-vaunted high level of productivity. The realization is sinking in that, if high living standards are to be maintained, something significant has to change. Thierry Breton, France's Finance Minister, summed up the new mood in the French Parliament in June: "To finance our model, we need to work more. We have to work more to create growth. We have to work more throughout our lives."

On most of the planet, that sort of statement would be a truism. Theoreticians from Sigmund Freud to Hannah Arendt have spoken of Homo faber, defining mankind in terms of its ability to work and create. The sociologist Max Weber famously saw in capitalism the vestiges of Protestant salvation, and in much of the world — the U.S., most of Asia — the notion that work is an ennobling path to a rewarding life still prevails. But not, tellingly, in Western Europe. The social settlement after World War II provided a generous safety net for those who didn't work. And so the persistence of double-digit unemployment in some of Europe's biggest economies during good economic times as well as bad is evidence not just of people who can't get jobs, or of people who don't want them — though clearly there are plenty in both categories — but also of people who have never felt that they needed to work.

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Why Germany Can't Restart The Engine [Nov. 7, 2002] Unemployment is high, bankruptcies are rife, banks are teetering and taxes are going up. How did the German economy get this bad? Coping with Labor's Pains [Apr. 16, 2002] Union boss Sergio Cofferati may be the only Italian on the left who can challenge Prime Minister Silvio Berlusconi Across The New Frontier [Jun. 18, 2002] Governments across the E.U. are cracking down on immigration. Will their tough new measures create more problems than they solve? Blood, Sweat, Toil and Tears [Aug. 06, 2001] As the slowdown worsens, Europe's jobless look to the state to ease their pain. Get Us Out Of Here [Dec. 16, 2002] German businesses are starting to flee rising taxes, a failing economy and a Chancellor who can't seem to cope Growing, Growing ... Gone? [Feb. 14, 2005] China's under control, Europe's finally reforming, and the global economic outlook is rosy, right? Not quite No Entry [March 1, 2004] The E.U. wants to discourage migration from the new member states in the east. Saying No to Profits [Apr. 15, 2001] Since Marks & Spencer and Danone announced thousands of job losses, France has been fighting back with court action, boycotts and demos Search all issues of TIME Magazine Indicates premium content