Despite some modest improvement since 1997, persistently high unemployment remains a major problem in Europe, especially among most of the economies that entered monetary union on January 1, 1999. The election of new governments in many of these countries in recent years and the change in the policy framework associated with the formation of monetary union have given renewed impetus to policy discussions and efforts to reduce joblessness and promote employment growth. The issues involved are wide-ranging: short-term concerns center on the recent slowdown of growth that has reduced the likelihood of a decline in cyclical unemployment in 1999 and threatens to exacerbate unsustainable global current account imbalances. In the medium and long run, the dramatic increase in the old-age dependency ratio makes the low employment ratios that go hand in hand with high European unemployment increasingly costly and unsustainable.