Europe: After the Great Recession, the Great Regression - by Paul Taylor

After the great recession, Europe has embarked on a great regression.
Wages, pensions, unemployment insurance, welfare benefits and collective bargaining are under attack in many countries as governments struggle to reduce debts swollen partly by the cost of rescuing banks during the global financial crisis.


Unlike bankers and bondholders, the European social model is being given a haircut — a light trim in Nordic countries, but a brutal short-back-and-sides in some others. The rollback of wages and social benefits is toughest in Greece, Ireland, Romania and Latvia, which are implementing bailout programs designed by the International Monetary Fund and the European Union. “The messages are the same: Cut wages — public sector wages, minimum wages — reduce benefits and raise retirement ages, and also reduce employment protection in certain countries,” Mr. Monks said.

Under the banner of fiscal sustainability, Europe’s mostly center-right governments are unwinding some cherished gains of the era of social progress that began after World War II, at the price of widening inequality.
Emerging countries like China and India achieved competitiveness through low wages, no collective bargaining, little or no health care and social insurance, and disregard for the environment in exploiting resources and production. “The question for Europe is: Do we emulate that model?”, said Mr. Papandreou the Greek PM in Davos. “Because what we are seeing is on the one hand a race to the bottom at the level of the middle and working class, and at the other end a race to the top.”

For more: After the Great Recession, the Great Regression - NYTimes.com