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... in Denmark as well, particularly in Aluminium and other export-heavy sectors.

But calls have gone out from Arbejderbevægelsens Erhvervsråd1 saying that this is A Very Bad Idea, because the problem is not with competitiveness, it is with a lack of demand, which is not solved by wage cuts - quite the contrary, they make things worse. (Translation into ET-speak: This is a demand-side crisis, and trying to solve it with supply-side policies is - at best - a beggar-thy-neighbour strategy.)

- Jake

1) AE-rådet are the serious people employed by the labour unions to try to spread a little sanity in public debate.

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 04:49:19 AM EST
JakeS:
this is A Very Bad Idea, because the problem is not with competitiveness, it is with a lack of demand, which is not solved by wage cuts - quite the contrary, they make things worse
If wage cuts still result in a larger aggregate income for the workers than unemployment subsidies, then the wage cuts are a stop-gap measure.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 04:51:30 AM EST
[ Parent ]
Assuming that they are in an A-kasse, and assuming that they are mostly unskilled labour, it will not result in a noticeably larger income than unemployment subsidies.

Skilled labour is another story.

Still, it's nothing that higher unemployment subsidies cannot solve.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 05:05:41 AM EST
[ Parent ]
Well, the idea here is to meet a lack of demand by reducing supply - which naturally means fewer hours worked, and hence lower wages.

Wages per hour will not be reduced by this plan.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Mar 3rd, 2009 at 04:59:33 AM EST
[ Parent ]
Oh. I didn't catch that angle. Well, that does make it much less objectionable. Although any wage-reducing deal that does not require the equity holders to go all the way down to a return of [German sovereign debt plus reasonable risk premium] and does not require upper management to take a drastic haircut (to the level of - say - university professor or mid-level public bureaucrat) strikes me as socialising losses from previously privatised gains.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 05:03:52 AM EST
[ Parent ]

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