Unemployment rates in the EU rose after the economic crisis of 2008, passing 10% in 2012, but with big variations between countries. The worst afflicted had been subject to so-called policies of internal devaluation, aimed at curing unemployment by reducing wage costs. This book provides a comparative study of countries that to varying degrees followed that road (Greece, Spain, Portugal, Ireland) set against others that did not (Germany, UK, Poland).

The analysis points to three main conclusions. The first is that unemployment was not caused by excessive wages. There were issues of competitiveness in some countries but they related to the absence of high-quality export sectors. The second is that internal devaluation did reduce balance of payments current account deficits, but overwhelmingly by reducing living standards and hence imports. It did not trigger higher exports, although in several countries they increased for completely different reasons. The third is that internal devaluation has led to more rather than less unemployment and to less rather than more growth. The book points the way to alternative, and more effective, solutions based on improved competitiveness and more employment following spending and investment in infrastructure, education and research, areas that have suffered in the interests of internal devaluation policies.

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Table of contents

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Martin Myant, Sotiria Theodoropoulou and Agnieszka Piasna: Introduction

Sotiria Theodoropoulou: Chapter 1 - Severe pain, very little gain: internal devaluation and rising unemployment in Greece

Tom A. McDonnell and Rory O’Farrell: Chapter 2 - Fall of the Irish house of cards

António Bob Santos and Sofia Fernandes: Chapter 3 - Internal devaluation and unemployment: the case of Portugal

Jorge Uxó, Eladio Febrero and Fernando Bermejo: Chapter 4 - Crisis, unemployment and internal devaluation in Spain

Steffen Lehndorff: Chapter 5 - Internal devaluation and employment trends in Germany

Steve Coulter: Chapter 6 - The UK labour market and the ‘great recession’

Ma?gorzata Maciejewska, Adam Mrozowicki and Agnieszka Piasna: Chapter 7 - The silent and crawling crisis: international competition, labour market reforms and precarious jobs in Poland

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