Jonty Bloom...The corridors of power
In the last week I have visited both the Netherlands and Spain.[QQ] I was able to take some cash out of an ATM in Tilburg, near Eindhoven and spend the money in a tapas bar in Spain.
It is still quite a shock to be able to do that and a good example of the advantages of the single currency.
But although for frequent travellers it is convenient that both Spain and Holland are members of the euro, their economies are not that similar.
Holland is a high technology economy that has achieved the lowest rate of unemployment in Europe (2%) by fostering co-operation between trade unions and employers.
Wages are kept low and in return firms pour money into training and education.
The Dutch also have one million people who are not out of work but registered disabled.
These days the Dutch government is concentrating on retraining immigrants and encouraging those who took early retirement to return to the workforce, otherwise it would just run out of workers.
Spain on the other hand has one of the worst levels of unemployment in Europe. Part-time and temporary jobs are difficult to get, there is too much red tape and unemployment benefits are generous. Companies are reluctant to take on staff because the costs are so high.
The result – unemployment at around 12% and, although it has brought the rate down from above 20%, Spain is still the sick man of Europe when it comes to jobs.
Outside influences affect both economies in different ways. Spain, for instance, will be hit by the economic collapse of Argentina. The Netherlands is hardly likely to notice that but the slowdown in the world computer industry hits its industrial giant Philips hard.
But both countries are in the single currency and therefore have the same interest rates. Of course before they could join the eurozone there had to be a convergence between their economies but their different levels of – and attitudes to – unemployment show that there are differences as well.
- Jonty Bloom is a business news reporter at the BBC.