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Certainly in Germany when people talk about the labor market being inflexible what they mean is that people are less willing to pull up stakes and move. But is this a bad thing? Certainly not from a social point of view.

As regards costs, die Zeit has recently published several articles contrasting how Germany and the Scandinavian countries finance social benefits. Germany finances these primarily through wage deductions and matching employer contributions, whereas Scandinavia pays for these through high personal income taxes and VAT rates. The result is that German social benefits represent a 42% surcharge on wages. Meanwhile, unemployment in Denmark and Sweden is running around 5.5%.


The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Tue Jun 21st, 2005 at 12:51:35 PM EST

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