Merkel Calls For Harmonisation On Retirement and Holidays In The EU

Published: 9th September 2013

Angela Markel, the German Chancellor released a controversial proposal last week that would agree the retirement age as well as the holiday entitlement in various European Union countries, particularly those countries that were the hardest hit by the debt crisis.

The Organisation of Economic Cooperation and Development (OECD) produced figures showing the Spanish worked an average of 1,653 hours anually in 2009 and the Germans worked an average of 1,389 hours. This represents a 19% difference. On average Germans earn €42,400.00 per annum compared to €23,200.00 in Spain. However, holidays were similar in the two countries with 30 days in Spain and 24 days in Germany. Productivity per hour in Germany operates at 93.5% of Gross Domestic Product (GDP) where as Spain operates at 82.2%

Spain remains the country with the highest unemployment rate in Europe with 21.3% of the workforce unemployed, while German unemployment fell to 7.1%, the lowest percentage since reunification. This difference in unemployment has affected productivity. Spain with a population of 45.9 million currently have almost 5 million unemployed where as Germany, with 81.8 million people have less than 3 million unemployed.

The Spanish tax burden, income tax and Social Security contrubution accounted for 19.7% in 2009 while the Germans contrubute 41.3% of their salary. However, German companies contribute 1.3% of their GDP compared to 2.2% contributed by Spanish companies, according to the OECD.

The wage gap between men and women in Spain is lower than that in Germany at 16.1% and 23.2% respectively.

As both countries appear to have many similarities, Merkel's comments have little foundation when making a comparison regarding pensions and retirement. The life expectancy in Spain for men and women is 78.6 and 84.9 years resectivley where as the Germans life expectancy is slightly lower 77.8 years for men and 82.8 for women. The legal retirement age in both countries is 65 years old and both countries have an approved amendment for the retirement age to increase to 67 years old. However, the Spanish seem to retire slightly later than the Germans according to “Pensions at a Glance” published by the OECD last April.

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