Above Average?

Germany’s labor costs above EU average? Sure. But take a closer look. Forget about Eastern Europe.

Cost

Germany is one of the lowest when it comes to labor costs in Western Europe. And maybe there’s a connection here somewhere but it’s unemployment rate is also one the lowest.

“This convergence of relative labor costs results from the fact that in countries with low labor costs, growth rates have been well above those of countries with already high labor costs for many years.”

Speaking Of The Dark Side

Here’s a little tidbit about the dark side of “Germany’s jobs miracle.”

“BEST LOW WAGE SECTOR IN EUROPE”

Job growth in Germany has been especially strong for low wage and temporary agency employment because of deregulation and the promotion of flexible, low-income, state-subsidised so-called “mini-jobs”.

The number of full-time workers on low wages – sometimes defined as less than two thirds of middle income – rose by 13.5 percent to 4.3 million between 2005 and 2010, three times faster than other employment, according to the Labour Office.

Germany can only hope that other European countries do not emulate its own wage deflationary policies too closely, as demand will dry up: “If everyone is doing same thing, there won’t be anyone left to export to.”

PS: Like I noted on a post the other day, the USA and Germany have more in common than they think. Now the Greeks are burning German flags, too.