The following chart from the Washington Post of Europe’s unemployed youth really captures the human suffering of the European debt and banking crisis. It also illustrates why labor reform needs to be a key component of the structural adjustment in the European periphery.
As the market obsesses over the Magic Draghi’s next move, we wonder if reform fatigue will constrain Spain and others from asking for help. Conditionality will no doubt be a precondition for ECB support, in our opinion. That may be what disappoints markets on Thursday.
A leaked email sent to the Greek Ministries of Finance and Labor from the Troika says Greek private sector workers should work six days a week and longer hours.
The letter, which was published on August 31, shows that the Troika expects the Labor Ministry to implement a number of other new measures. They include reducing the notice period before firing a worker, and cutting certain severance packages by 50 per cent by giving employers the right to reduce workers’ time in service. Restrictions on overtime are also expected to come into effect.
“It also wants a dismantling of the labor inspectorate which is the public service that is responsible for implementing labor law. So it’s not only about making the labor market more flexible,” Panagiotis Sotiris from the University of the Aegean told RT.