Jun 282012
 

Stockton’s doing it. Greece has done it. Spain and Italy are on the cusp. How do they do it?

Let me count the ways.

Stockton, reports the Wall Street Journal (Review & Outlook, June 27, 2012),

…has a little over $300 million in general-fund backed debt, but an $800 million unfunded liability for pensions and retiree health benefits. The latter, which are not pre-funded, are expected to grow by 7.5% annually for the foreseeable future. Pension costs are about 40% of what the city pays on worker salaries and are also growing. The average firefighter costs the city about $157,000 a year in pay and benefits and can retire at age 50 with a pension equal to 90% of his highest year’s salary plus nearly free lifetime health benefits.

Spain? In a case arising from Spain, reports the Journal (Review & Outlook, June 28)

Europeans who catch a sniffle this summer while paddle-boarding in Corfu can take heart: They may be owed another paid vacation to make up for it, following a decision last week by the European Court of Justice. Under the ruling, workers who get sick on holiday are entitled to paid time off equal to the amount of time they didn’t feel well during the original holiday.

Nice. But, as the Journal notes, the right to re-do a vacation doesn’t count for much if you don’t have a job. The social engineering embodied in the EU court ruling is one reason why unemployment in Spain is 25% — 50% for young people.

Italy? Well, if you are really interested, dig out your library card and find the Journal editorial headlined “Employment, Italian Style” in the June 25 edition. The laundry list of what Italian employers have to do to stay on the right side of the law is breath-taking. It helps explain why a disproportionate fraction of the Italian economy takes place off the books and beyond the reach of the tax collector.

For example, once Italian companies employ more than 15 people, they find it nearly impossible or extraordinarily expensive to fire anyone.

But there’s so much more. Once you hire employee 11, you must submit an annual self-assessment to the national authorities outlining every possible health and safety hazard to which your employees might be subject. These include stress that is work-related or caused by age, gender and racial differences. You must also note all precautionary and individual measures to prevent risks, procedures to carry them out, the names of employees in charge of safety, as well as the physician whose presence is required for the assessment.

That’s just for starters. The list goes on and on and on.

No wonder Italy has so few large companies. No wonder young Italians can’t find jobs, are reluctant to marry and are disinclined to have children.

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