Yet the notion that the labour market would be better off without adjustment does not hold water. The reforms form the basis for the economic turnaround and thus for an upturn in employment as well. Incidentally, the improvement in the peripheral countries’ current account positions was mirrored by a drop in German surpluses with these countries.
The region now faces a tremendous developmental challenge within which recovering the losses due to black swan events like the pandemic look the most formidable. Our countries have also experienced sharp increases in fiscal deficits and deterioration of the balance of payments. The future appears uncertain and gloomy against the backdrop of an unprecedented slowdown in economic activity, employment and export earnings.