The Wall Street Journal has several items of note today. (I'm reading from the online version -- links probably require a subscription.)
Another woeful story from German labor markets:
German unemployment rose to a new post-World War II record in February as the number of people without a job climbed above 5.2 million, according to government figures released Tuesday.
The jobless figure in Europe's largest economy hit a new record for the second straight month. A new benefit system introduced Jan. 1 to encourage long-term unemployed people to take jobs has contributed to the rise because it counts more people as officially jobless, the Federal Labor Agency said...
The labor agency said the effects of the new benefit system accounted for 126,000 of February's newly registered jobless -- about three-quarters of the total. The reform, aimed at increasing pressure on people to take jobs, required many social welfare recipients to register as jobless for the first time.
Cold winter weather that traditionally depresses construction activity and the weakness of Germany's economic recovery also contributed to the latest unemployment record, the agency said.
As if on cue, the Organisation for Economic Co-operation and Development offers some advice.
Europe will have to reform its labor markets and free its product markets to close the wealth gap with the U.S., the Organization for Economic Cooperation and Development said Tuesday.
In its first report on the economic reforms needed to boost growth among its 30 members, the OECD said under-utilization of labor is the key reason why per-capita incomes in Europe remain between 25% and 30% below those of the U.S.
"The gap is linked to lower hours worked per capita, lower output levels per hour worked, or both," the OECD said. "Labor under-utilization remains an area of key policy priority for most continental European countries."...
The OECD said the design of pension and disability benefit programs in a number of European countries acts as an incentive to those over 55 years of age to stop working, reducing the size of the work force...
It also said the costs of employing younger and low-skilled workers need to be cut if unemployment rates are to come down. This could be done mainly by reducing employers' social security contributions, but also by limiting increases in minimum wages.
Hmm. Meanwhile, the betting has begun on the European Central Bank's next move.
The surprise economic slowdown in Germany and Italy last quarter is helping push the European Central Bank to delay an interest-rate increase, underscoring concerns about when the recovery will kick in.
At Thursday's monthly policy meeting, the ECB is likely to make it known that a rate increase at which it had repeatedly hinted for this spring is premature. And it appears ready to trim its already-slim growth forecasts slightly for 2005 for the 12 nations that share the euro...
In recent days, discouraging news for a European rebound continues to stream in. Yesterday, the European Commission reported that its indicator of economic sentiment in the euro zone dropped in February to the lowest level in nearly a year -- 98.8 -- which is below the 15-year average of 100. The commission blamed a sharp drop in industrial confidence, which bodes ill for corporate investment and jobs in a region where unemployment is 8.9%. Stronger confidence had been one of the bright spots of Europe's struggling recovery, but that may be going into reverse as well.
That would not seem to bode well for the prospects of this story changing soon.