European Social Welfare State Model Running Out of Time and Money
Well, I guess it is the end of the line, komrads. What we are now witnessing is the glorious sovereign bankruptcy of the people.
Great column. I’m trying to be sympathetic about it all, but it is difficult since Europeans have largely been devouring three hot, steaming bowls of Schadenfreude daily vis à vis America’s much smaller entitlement programmes for the past few decades. Truth be told, I never thought it would collapse so soon. I was expecting it to at least last until a few years after the real retirement boom starts to put real pressure on Europe’s remaining workforce in the coming decade.
A couple of things that I could add to your list that represent a massive drain on productivity in Germany are not only early retirement, but also a very delayed entry into the labour market and pernicious underemployment. In Germany, it is not uncommon to start work around 25 – 27. Since hiring and firing is hampered by miles of red tape, many young people fresh out of university or one of the German apprenticeship programmes may have to complete a couple of years of additional poorly paid internships. Many Germans never draw their first real wages until they are in their thirties. In practical terms, this is the equivalent of a lost decade of wages. Additionally, even though unemployment is a major issue in Germany, they do not really have a concept of “underemployment.” The term “Unterbeschäftigung” exists, but very few people know exactly what it is. Due to the inflexibility of the labour markets, many people are forced to languish in poorly paid positions for years that they may be overqualified for but unable to advance as they could in the US. This is particularly true of people with degrees that they earned outside of Germany.
I always enjoy your columns.
