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      • Wages and regional coherence in the European Monetary Union

        Hansjorg Herr 한국사회학회 2007 한국사회학회 기타간행물 Vol.- No.-

        One of the key problems of the EMU consists in the regional distortions which, on the one hand, can lead to deflationary developments in some regions, first of all Germany, and in the long run also in the EMU as a whole. On the other hand, regions like Portugal, Italy or Spain are in danger of becoming regions of economic stagnation without the policy instruments available to come out of their unpleasant constellation. These regional distortions which developed in the EMU with enormous speed reflect the insufficient integration and the lack of EMU institutions. There are no EMU-wide unions and employers’ associations and EMU-wide wage negotiations can rarely be found. Wage negotiations and wage developments in Portugal or Spain, for example, seem to have no connection with wage negotiations and wage developments in Germany, the Netherlands or Austria. There have been attempts for a macroeconomic dialogue but they are too weak and not sufficiently supported by national governments, the European Commission and the European Central Bank. From its historical roots the EMU is a political project. Without a deeper political and institutional integration the EMU is economically fragile and likely to fall into deep regional problems with its entire social and political dimension. What is needed is institution building of a European state in whatever form. From the economic point of view a central state is needed to support the coherence of the EMU. Besides wages there is the problem of fiscal policy. It is highly questionable whether a monetary union without a strong central state can practice functional fiscal policy. So far the Stability and Growth Pact has been a failure.

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