Italian labor issue shows why eurozone may be doomed
Among the eurozone’s most critical flaws as a construct is that it has tied together countries with very different abilities to improve their labor productivity performance in a single monetary union, in which all member countries share a single currency.
Since its introduction in 1999, weak productivity countries in the euro area can no longer depreciate their currencies as they did before 1999 in order to restore lost international competitiveness.
This might not have been of great concern in recent years at a time of euro weakness, which made the eurozone as a whole more competitive in global markets. However, it now could be of serious concern because from the start of 2017, the euro has been strengthening markedly in the international currency market.
