WAGE COMPARISONS

One of the reasons for some people's advocating that Greece leave the Euro is that any new Greek currency would immediately depreciate. That in turn would reduce Greek wages (in Euro terms), something which is both currently impossible and absolutely necessary if Greece is to regain its economic competitiveness.

I am not so sure. I was in England last week, when the new rates for the minimum wage took effect on 1 October. They are £6.08 an hour for those over 21, £4.98 for those between 18 and 20 and £3.68 for those under 18. Translated into Danish kroner at a rate of 8.5, this gives roughly Dkr52, Dkr42 and Dkr32 respectively.

Seen with Danish eyes, those rates are terrible. My daughter is 17 and has a part-time job at the local bakery, exactly the sort of job that attracts the minimum wage. She gets paid about Dkr60 an hour (i.e. almost double the equivalent for someone of her age in the U.K.), plus extras if she works on Sundays or after 6pm. It's also almost 20% more than a 21-year old would get in the U.K. My son worked as an 18-year old as a lifeguard at the local swimming pool, and got quite a bit more than Dkr100 an hour.  

So what, you may say? Wage rates don't take account of taxes and/or living costs, and so are a crude comparison. I accept that; though I would have to say that a part-time job in Denmark rarely generates enough income to become taxable, and living in rural Fünen must surely be cheaper than living in (say) London. My real point is that nobody is saying that Denmark should devalue the krone (which is tied to the Euro) against the pound, so that Danish wage levels equalise with Britain's.

In other words, things are a tad more complicated than the headlines suggest. We should remember that, the next time a politician suggests booting the Greeks out of the Euro.

Walter Blotscher