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How Governments Should Support the Adjustment of Competitiveness in the Euro Area – and How They Should Not
Author(s) -
Zemanek Holger
Publication year - 2012
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.2012.02178.x
Subject(s) - productivity , wage , economics , quality (philosophy) , value (mathematics) , element (criminal law) , labour economics , international economics , business , market economy , macroeconomics , philosophy , epistemology , machine learning , computer science , political science , law
In addition to unsustainable fiscal policies, the weak competitiveness of southern E uropean countries is contributing to the ongoing crisis in the euro area. However, wages and productivity are only one element of competitiveness and the value of competitive wages is hard to measure. Hard‐to‐identify non‐price competitiveness such as quality, innovation and technology of goods affects overall competitiveness too. Given the lack of information, the necessary level of wage adjustment needs to be negotiated on the market. Governments can support a market based adjustment of competitiveness by liberalising labour markets and by strengthening the business environment.