For a window into exactly how unrealistic vague aspirations for faster growth in the Eurozone periphery are, it’s worth looking at the hazy statement the European leaders made on this subject in yesterday’s declaration. Specifically, they swore that “[w]e will implement the recommendations adopted in June for reforms that will enhance our growth.” The recommendations in question can be found in the Europe 2020 document and include as just one prong of the program each country’s solemn commitment to achieve a “75% employment rate for women and men aged 20–64 by 2020– achieved by getting more people into work, especially women, the young, older and low-skilled people and legal migrants.”
Note that the European Union doesn’t so much as publish data on the 20–64 employment-population ratio. But fortunately Matt Cameron was able to piece it together for a few key countries based on the breakouts the OECD tracks. Here’s a comparison of the United States with Italy and Spain:
Spain had a smaller share of its population employed at the business cycle peak than the Untied States had at the business cycle trough. Italy had an even smaller share than that employed. This reflects, among other things, southern European attitudes toward family and child-rearing that, like them or not, are unlikely to simply vanish with the wave of a Eurocrats’ wand. And yet somehow we’re expected to believe that Italy can undertake some kind of labor market reform that will allow it to attain the level of employment that the United States had at the business cycle peak in the face of both fiscal and monetary contraction. How’s that supposed to work? And who seriously wants to bet on it happening?