Brussels, 14/10/2005 (Agence Europe) - “Once again, the European Commission is demonstrating its dogmatic blindness”, said MEP Benoît Hamon (PSE, France) following the publication of the quarterly report on the economy of the eurozone (EUROPE 9043), in which “we see this staggering statement which says that all we have to do is reduce salaries by 3.7% in the eurozone over three years to achieve 1% more growth”. In his view “even though we can see that there is a crisis in internal demand and consumption, the European Commission proposes as a sole remedy a considerable tightening of the purchasing power of Europeans who live off their work”. This “fundamentally antisocial position” shows “blatant disregard for reality and economic rationality in the name of a quasi-religious belief in the most retrograde liberal economic theories” he went on, proclaiming that “today the European project is succumbing to a liberal overdose”.
Among the possible scenarios envisaged by the Commission in its analysis of the impact of structural reforms on growth there is the possibility of completing the market for products as well as that of lowering salaries. In the latter case, the Commission estimates that a salary reduction of 3.7% is likely to bring about an increase in growth of 0.41% in the first year, rising to 0.78% in the second year and 1% by the end of three years. “Wage moderation stimulates investment spending and brings about a rise in the level of productivity and employment and reduces unemployment, which also increases private consumption in spite of the initial loss of revenue", the report indicates. On 10 October, Commissioner Almunia explained to the finance ministers of the eurozone that the wage moderation pursued by Berlin has made a considerable contribution to strengthening German competitiveness, contrary to what is happening in other Member States, such as Italy.