Just in case Angela Merkel reads EU Commission research... here's a chart summarizing the 'structural' adjustments to-date courtesy of JMP Research:
- Delivered second largest drop in unit labour costs in the periphery (much of that, as in Greece's case and Spain due to massive spikes in unemployment)
- Produced 4th largest (or second lowest) improvement in current account dynamics and had 3rd highest increase in unemployment.
In other words, as with fiscal adjustments, our 'structural' gains are far from being 'special' or exemplary, but rather represent below average levels of achievement compared to other 'peripheral' economies.
And in case you need more, here's a bit on wages 'moderation' in Ireland:
The chart above shows pretty clearly that while Ireland claims to have achieved tremendous gains in labour costs competitiveness, in reality our gains are only spectacular if we forget the rapid inflation experienced in 2000-2009. Let's run some maths: between 2000 and 2012:
- Greek nominal labour costs relative to EU average fell 0.37%
- Irish rose 7.69%
- Portuguese fell 4.21%
- Spanish rose 6.4%
- Dutch rose 8.9%
- Italian rose 1.97%
- French rose 1% and
- German fell 16.36%
In other words, Ireland's labour costs still are up more than for any other peripheral state and, in fact, are only lower relative to the EU average against the Netherlands. Spot anything 'special' here?