sexta-feira, junho 12, 2015

Measuring Divergence in the Eurozone - unemployment and retirement

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