Somehow Germany’s efficient Labour costs are hurting the rest of Europe, says the French finance minister:
“Clearly Germany has done an awfully good job in the last 10 years or so, improving competitiveness, putting very high pressure on its labour costs. When you look at unit labour costs to Germany, they have done a tremendous job in that respect. I’m not sure it is a sustainable model for the long term and for the whole of the group. Clearly we need better convergence.”
Thing is, such an argument might be remotely sound if Germany were a low-income country. But it isn’t, Germans enjoy a rather high standard of living and has high wages. Thus the fact that Germany can be cost competitive is a matter of efficiency. So we’re not sure what kind of Europe France’s finance minister envisions as the ideal. The German model would seem to be the solution, rather than the problem.