By Paolo von Schirach
May 31, 2013
WASHINGTON – Yesterday (see link above) I pointed out that Southern Europe’s problem is not “too much austerity” that may cripple growth. Sadly, the real problem is terminal lack of competitiveness in a fiercely competitive global economy. Recently released unemployment data underscore this point.
Sky high unemployment
To place EU (all 27 members) and Eurozone (17 countries within the EU that adopted the Euro as their currency) in context, let’s consider that US unemployment, currently still at 7.5%, is considered way too high and a clear sign of an American economy that so far failed to recover fully from the disaster of 2008-2009.
Alright. If 7.5% is way too high, how would you rate a EU (27 countries) unemployment rate at 11%? And how does 12,2% for the Eurozone (17 countries) look to you?
And do consider that within this disaster there are a few star performers –Austria unemployment at 4.9% and Germany at 5.4%– that lower the averages. In other words, if you take selected Northern European countries out, the emerging picture is a total, unmitigated disaster.
Here is the real story of Southern Europe. Unemployment rate in the first quarter of 2013:
- Greece at 27%
- Spain at 26.8%
- Portugal at 17.8%
- Italy at 12.8% (with youth unemployment above 40%)
Looking at this data, only a fool would believe that just by relaxing Brussels imposed austerity a bit here and there one would get a genuine economic revival.
No innovation, no jobs creation
I pointed out in my previous piece (referred to above) that Europe in general and Southern Europe in particular,(Germany and a few others being the exception), suffer because it does not invest almost anything in R&D. Without abundant capital invested in innovation leading to the creation of vibrant new sectors, where will new growth come from? Who will invest, this way creating new jobs? Or are we back to fake, unproductive jobs created by ill advised government-led projects?