European Central Bank president Jean-Claude Trichet stressed yesterday that heavily indebted eurozone countries facing tough austerity measures were responsible for their crises and urged them to follow Germany’s example.
“What we call austerity today is correction of, in many cases I have to say, evolution in the past that were not reasonable, and should have been prevented,” Mr Trichet told MEPs.
Responding to questions from Parliament’s economic and monetary affairs committee, Mr Trichet pointed out that public sector wages and salaries in three countries he did not name were “very significantly higher than the average augmentation of unit labour costs in the euro area as a whole.”
Giving a eurozone average of “something like 38 per cent” in the first years of monetary union, in several countries it was “very very very largely superior,” and “in two countries it was even over and above 100 per cent,” Mr Trichet noted.
“So what we are observing now is a correction and not something that comes from an abstract world and is imposed for abstract reasons,” he added.
In Athens, lawmakers cast a decisive second vote yesterday on stinging new austerity measures to anchor the financial future of Greece and the eurozone, following days of rioting.
“These corrections are necessary if we want to get back to growth and job creation,” the ECB president said.
He pointed to Germany, without naming it specifically to begin with, saying that “one country” that had sought to regain competitiveness several years ago “paid enormous attention to unit labour costs”.
“And what we have today is growth, job creation, and remarkable resiliance to the worst crisis since World War II,” Mr Trichet noted.
“Spontaneously the firms and the social partners did what they thought was necessary to regain competitiveness and the results are there, the prosperity is there, the exports are there, the job creation is there.”
Germany pulled out of the economic crisis with record growth last year and official figures showed yesterday that unemployment fell further below the politically sensitive three-million mark in June.