This is a warning to all European citizens. German Chancellor Angela Merkel urged euro-zone members on Thursday to become more competitive. Taking economically depressive Greece as example, ‘competitiveness’ in Merkel’s mind means ‘peanuts’ for wages and some ‘bread crumbles’ as social benefits. It means harsh austerity without one single euro for growth and development. And money only for loan repayments. I know some monkeys who can really go wild if they are fed only with peanuts…..
Angela Merkel Wednesday urged euro-zone members to become more competitive and take the strongest countries’ economies as a role model, highlighting Berlin’s tough reform stance ahead of a European Union summit later this week.
“One of the main causes for the monetary union’s crisis is the grave difference in the competitiveness of the 17 member states,” the German Chancellor told reporters. “If we don’t manage to achieve a process of adjustment, we won’t be able to stabilize the euro area permanently.”
Germany is one of the strongest-performing economies in the euro zone and unlike most other countries, its labor market is reporting low unemployment figures. Berlin has repeatedly said its structural reforms over past years has helped to turn the former ‘Sick man of Europe’ into the currency area’s growth engine.
Merkel stressed the euro zone has only “bought time” with its bailout facilities and that is why member countries must urgently enact reforms.
She implored fellow EU leaders to look to the strongest-performing economies as role models for reform and not mediocrity. (Full Article in WSJ)
Beginning of February German Chancellor Angela Merkel had called for a European ‘Pact of Competitiveness’ jointly with her French counterpart Nicholas Sarkozy. The fiscal pact aims at reforming some key areas in Europe in order to make the euro-zone more competitive. (further reading in Euractiv)
However Merkel insists on not increasing the size of euro zone rescue funds. Austerity with competitiveness? Prosperity without growth? Hardly…
The head of EU employers’ lobby BusinessEurope warned Europe’s leaders that domestic demand remains depressed and expansion plans have been undermined by political uncertainty.
“We must not allow an acute crisis to become a chronic story of low growth,” Philippe de Buck said.
Unemployment in the 17-nation euro zone hit a euro-era record 10.7 percent in January, data out on Thursday showed, and the euro zone’s manufacturing sector contracted for the seventh month running in February. (Reuters)
An urgent call for growth was made by European Council President Herman Van Rompuy. He urged EU leaders in a letter to focus on practical implementation of economic reforms to boost their growth potential.
Van Rompuy said in a paper prepared for the summit that those countries under market scrutiny must pursue fiscal consolidation in earnest, but others should use their budgetary room for manoeuvre to boost demand to fight economic stagnation. Also Van Rompuy did not devoted a single sentence on funds needed to boost growth in debt-ridden countries.
It is so wonderful, this competitiveness thing. Let’s assume that tomorrow morning we all wake up and Greece, Portugal and a couple of other countries have met the tooth-fairy and we are suddenly as ‘competitive’ as Merkel says Germany is… Think the panic will strike in Germany, Holland, Finland… Because their jobs will evaporate and transferred to us.
Or is it all just a trick to get the salaries of of the workers in those countries down too down the line? “Greece and Portugal are so competitive now, we HAVE to halve your income!” Might be???
Exactly your suspicion! BTW: I wish I was a competitive worker in welfare state Germany
Me too! Those German workers seem to work half the hours with double the pay, compared with here in Greece. And then they pay far less into their social insurance and get far more if they need it. Paradise!
So in order to keep their jobs the Germans and Dutch and Finns should keep on paying the Greeks not to work? That makes sense!
If other nations were as competitive as Germany, that would reduce the current account surplus here, and move the Eurozone closer to balanced trade. What’s not to like? Of course, this would force our politicians to finally do more to boost domestic demand, to make up for the decreased export business, but that wouldn’t be exactly a bad development.
Also, all that fingerpointing at Germany for being too successful would stop. That would be nice. Really, the competition fairy can’t come soon enough.
But she would have a lot more to do than simply reducing the labor costs somewhat. She would have to modernize the administration, terminate corruption, make contraditionary and overly complicated laws disappear, speed up the jurisdiction, increase the responsibility of the politicians and union leaders, improve the infrastructure etc etc etc. Competitiveness isn’t simply the result of low wages (or else Germany would be broke), it depends on a whole lot of factors.