Gabriel Porcile (ECLAC)
There is a story that says that the key for the export success of Germany is the fall in relative wages that emerged from a more flexible labor market (the Hartz reforms of 2003-2005). As a result, unitary costs fell in Germany and made her more competitive. Other European countries opted to maintain protected labor markets which made it impossible for them to resist German’s wage depreciation. The rest of the story is well known: mounting disequilibria in current account for those that lagged behind in liberalizing the labor market, debt and crisis. But perhaps the story is not totally consistent with the empirical evidence.