July 9, 2012
Unemployment rates in the Eurozone is something you look and get scared. But when you go down to comparative analysis of the most affected countries, like Spain, Italy, Greece and Portugal, you feel like getting literally overwhelmed.
As we see in the aggregate data below, we come to the following conclusions:
1. The Eurozone average unemployment rate is above 10 %, the highest ever since the adoption of euro as the single currency
2. In Spain it almost reaches 1/4 of its manpower, the highest ever in the European modern history and similar to Third World countries of Sub-Saharian Africa
3. Greece follows with similar rate, but with a much smaller market and with much less production dynamics, weaker regulatory and fiscal mechanisms
4. Portugal and Ireland are tending to follow the case of Greece, but with lower pace
5. France and Italy seem to lose control comparatively to the previous 2 years
6. Germany presents a slightly increasing rate but has a long way to go in order to reach short-term downturn
Aside mere statistics, there are two major observations we need to point out as the crisis hits historical records. The first one is that Greece is comparatively in worse condition than Spain if we take into account the following four variables: size of market, level of debt, growth predictions, political conditions. Concerning the size of market, Greece has the 1/4 of the Spanish market which means that it has relatively much higher unemployment rate than Spain. Concerning debt, Greece’s rate is comparatively higher than that of Spain. Dealing with growth prediction, Spain it is in better position than Greece only if we take into consideration Spain’s political stability, the lower debt rates, and the trust over tax collective mechanisms.
Italy and France are in better position but both Hollande and Monti are deeply concerned as the Growth Pact agreed on June, 30 in Brussels towards invigorating South Europe’s growth plan necessitates time and state efficiency to bring some resutls. On the other hand Germany is the only prosperous market in Eurozone according to the data above, and it turns to be robust when we include the current account balance increased by $ 206.3 billions since June 2011, when the second-in-row country is Netherlands with only 1/3 of Germany’s performance. After this duet comes Austria with $8.o billion whereas the average Eurozone’s rate is increased by $11.8 billion (The Economist Economic Data, June 23rd, 2012, p. 88).
Therefore the coalitions formed inside Eurozone are the following two: the countries of the South from one side, and Germany, Austria and the Netherlands from the other. These two confronting coalitions inevitably unveil the lack of a common will to combat Eurozone crisis in a concrete and definite manner, let alone the fact that political antagonisms are rising accordingly. In this respect, the dilemma that comes up is the following: Can Eurozone overcome the crisis with joint and fully-committed actions agreed and abided by all member-states, or we are experiencing the slow death of one of the most ambitious yet assymetric economic unions in global history?