Social spending has exploded in the PIIGS countries
This chart from Eurostat compares social spending in selected European countries in 1999 against spending in 2009. It’s no surprise that Spain, Portugal, Ireland and Greece saw huge increases as a proportion of their GDP in the 10 years.
What are we talking about here? Social security benefits, growing health and retirement benefits etc etc. Earlier retirements, greater pensions, huge government sectors and on and on.
Take a look at Germany and Denmark’s numbers for fiscal prudence. What is clear is that if the PIIGS fail to rightsize their social spending, they will spend themselves into the abyss.
Until Spain’s Prime Minister Mariano Rajoy recently passed new rules Spanish banks could fire employees aged over 50 and count on the state paying them two years unemployment benefit before they took early retirement and a state pension. (Retirement at 52 years old. Wow!)
The new rules, which affect all large Spanish companies that are trimming staff numbers, will help the government save as much as 350 million euros a year, El Pais reports.
Now if only America could draw lessons from this…(sigh).
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