In the absense of the classical economic adjustments mechanisms, like the exchange rate, the Eurozone appears to be trapped in persistent divergence and creditor-debtor conflicts, as it relies on the painful application of one-sided austerity measures.
If you are the foolish borrower, you can count on receiving endless sermonizing and policy instructions from the foolish creditors who lent you too much money without asking tough questions BEFORE, but who now fear for their debt repayment.
NOW they insist with tough answers: cut pensions, eliminate early retirement, raise the retirement age ...
Among other things, this pressuposes that older workers want and need to work, and that there is effective labour market demand for their paid services. It is not easy to guess whether older people want to work, or whether they really need to work even if their real incomes are low. But we can readily deduce the lack of demand for older workers in various countries from the diverging unemployment rates of 55-64 year olds, which range from a low 3.4% in Austria, to a high of 19.6% in Spain.
Further, there is a large divergence in employment rates of older workers across EU countries. In 2013 the (unweighted) EU28 average was 50.1%, ranging from 33.5% in Slovenia and 35.6% in Greece to 63.5% in Germany and 73.6% in Sweden.
A hard working 72-year-old German may well push Greek oldsters to continuing working, caring little that nearly one in five 55-64 year old Greeks is already involuntarily idle (the definition of unemployment), as a result of the dislocation caused by the shrinking economy, obsolete skills, etc. And who would buy the goods produced by those workers if demand for the country's exports is low?
But who needs economics or statistics when you can preach a good sermon, especially to your own choir?
Mariana Abrantes de Sousa
PPP Lusofonia
If you are the foolish borrower, you can count on receiving endless sermonizing and policy instructions from the foolish creditors who lent you too much money without asking tough questions BEFORE, but who now fear for their debt repayment. NOW they insist with tough answers: cut pensions, eliminate early retirement, raise the retirement age ...
Among other things, this pressuposes that older workers want and need to work, and that there is effective labour market demand for their paid services. It is not easy to guess whether older people want to work, or whether they really need to work even if their real incomes are low. But we can readily deduce the lack of demand for older workers in various countries from the diverging unemployment rates of 55-64 year olds, which range from a low 3.4% in Austria, to a high of 19.6% in Spain.
Further, there is a large divergence in employment rates of older workers across EU countries. In 2013 the (unweighted) EU28 average was 50.1%, ranging from 33.5% in Slovenia and 35.6% in Greece to 63.5% in Germany and 73.6% in Sweden.A hard working 72-year-old German may well push Greek oldsters to continuing working, caring little that nearly one in five 55-64 year old Greeks is already involuntarily idle (the definition of unemployment), as a result of the dislocation caused by the shrinking economy, obsolete skills, etc. And who would buy the goods produced by those workers if demand for the country's exports is low?
But who needs economics or statistics when you can preach a good sermon, especially to your own choir?
Mariana Abrantes de Sousa
PPP Lusofonia
Os desempregados mais velhos poderiam aprender alemão e emigrar para a Alemanha onde há mais oferta de trabalho.
ResponderEliminarPior é que burro velho não aprende linguas
The constituional impediment to cutting nominal wages and pensions in Greece and other countries goes to the critical issue of coping with divergence within the Eurozone, which is getting worse due to the over-reliance on the one-sided "domestic devaluation" in countries without their own currency, rather than the traditional multi-lateral devaluations which used to spread the burden of balance of payments adjustments among the various trading partners.
ResponderEliminarGreece can cut pensions, and change ministers and governments overnight, but it will not be able to repay debt and reduce the real external debt burden unless it can sharply increase exports.
Or pay interest in hotel vouchers...now, there's a truly "national currency".
Says The Economist on 23-June
ResponderEliminar"One reason why the Greek pension bill is so large is that unemployed people opted for early retirement."
We focused on this issue on 12-June!