Home > Uncategorized > The failure of ‘structural reforms’: employment in Spain, Ireland, the Baltics and Poland.

The failure of ‘structural reforms’: employment in Spain, Ireland, the Baltics and Poland.

The Baltic economies and Ireland are the poster children of the radical structural reformers, who seized the big fat opportunity of the Great European Crisis to dumb down labour, dismantle the welfare state and prioritize financial interests. Their argument: problems caused by a financial crisis, highly leveraged households and the largest building booms and busts ever have to be solved by cutting wages, pensions, welfare, unemployment benefits and government expenditure and to re-regulate the economy to enhance job and financial insecurity of households.

TheshameofEurope1

 

Did it work? Nope (graph 1).

After a bust which, in a post WW II European perspective can only be compared to the post-communist crisis, employment did recover a little in the Baltics (Estonia, Lithuania, Latvia which together have about 7 million inhabitants) and even less in Ireland (4 million inhabitants). But in the EU fringe economies it is still way below historical levels, especially in Spain (40 million inhabitants). Mind that during last year this recovery is stalling in Ireland as well as in the Baltics. Poland, which never knew a financial bubble and devaluated post 2008, did to the contrary see quite some job creation during the last year (+1,7%, which is good). Post 2008, the Spanish non-construction economy did quite well, considering the epic size of the construction bust. But it will take decades to recover. As these countries have been and are (Spain!) experiencing massive out-migration while birth rates have been very low for decades, the development of employment rates (the % of people between 20 and 64 which have a job or another kind of income from work) is less dismal (graph 2).

TheshameofEuope2

In Latvia, employment in 2014Q2 was practically the same as in 2013Q2 but the employment level increased with no less than 1,7%-points. In Lithuania, employment increased with 0,9% but the employment rate with 1,4%, in the same period. The employment rate in Poland (38 million inhabitants) is at a (post-communist) record level. The post 2000 increase of the Spanish employment rate was largely due to an increase of the participation rate of women, the post 2007 decline was largely due to a decrease in the employment rate of men.

 

  1. December 28, 2014 at 2:24 pm

    I wonder … does the second graph illustrate lurking totalitarian cronies in Spain? Might we find evidence of totalitarian inefficiency in a graph like this? Wo0uld jot be possible short of, say, introducing kilocalorie currency to develop a quick benchmark of corporate totalitarian dominance of an economy?

  2. Bruce E. Woych
    December 28, 2014 at 2:31 pm

    http://www.icij.org/tags/offshore-finance …Multiple articles

    Offshore finance: International Consortium of Investigative Journalists. A Project of the Center for Public Integrity.

  3. Bruce E. Woych
    December 28, 2014 at 2:56 pm

    IRE Conference highlights
    How To Track Looted Wealth By Sheila Coronel
    http://www.icij.org/blog/2012/06/how-track-looted-wealth

  4. December 28, 2014 at 5:46 pm

    Garret, Why do you mind with “totalitarian cronies” and “corporate totalitarian dominance”? It is the first time that I ear about.

    • December 29, 2014 at 6:49 pm

      Corporatism, corporatiivismo; is this not the system of fascist totalitarianism? Many governmental systems hold wealth to be goodness, regardless of the harm done acquiring it. Inefficiencies of subsidized benefits to uneconomic corporations the centralize wealth but do not create it would show as a decline in the value of a nation’s currency, I believe in direct proportion to the inefficiencies of totalitarian subsidized business dominance in the national economy.

      There must be an elegant way to graph the relative efficiencies of economies using something like this.

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