In the middle of the political storm unleashed by Germany's unbridled immigration policies, the European Central Bank (ECB.) introduced two weeks ago an economic rationale to support an open quest of German businesses for waves of immigrant manpower.
One of the ECB's vice presidents, seconded by the president of the German central bank, emphatically argued that the euro area needed an increasing amount of labor input lest it be condemned to inescapable economic stagnation or worse.
Technically, the argument of the European central bankers is unassailable. In the five years to 2014, the euro area's average annual growth of the active civilian labor force was a dismal 0.3 percent – a sharp and unmistakable slowdown from an already weak 0.7 percent average annual growth over the previous twenty years.
The danger is clear. Such a decline in labor supply cannot be offset by capital intensive (i.e. labor saving) production processes to keep the economy growing and generating enough wealth to ensure sound public finances and the maintenance of European welfare states.
And neither can that create an economy offering full employment and an acceptable price stability.
Here again, the euro area record is quite worrying. Between 2010 and 2014, the area's growth potential (a variable approximated by the sum of growth of labor supply and productivity) was estimated at an average annual rate of 0.7 percent. That is also a huge drop from a 1.9 percent average annual growth during the previous twenty years.
The result is this: In the first two quarters of this year, the euro area was growing at an annual rate of 1 percent, and the unemployment rate in July was stuck at 10.9 percent – very little progress from 11.5 percent observed in the same month of last year.
Now, here is something for the Germans, the EU Commission (ominously accused by French politicians of all stripes of dancing to the German tune) and the ECB to think about.
That 10.9 percent euro area unemployment rate is telling us that there are currently 15.532 million people out of work in the 19 countries of the monetary union. Things get much worse for the 28 EU member states: 23.067 million men and women were unable to find a job in July.
Perhaps the most heart-breaking statistic is that 3.093 million young people (below the age of 25) in the euro area were out of work, with that number going up to 4.634 million in the EU as a whole. The situation is particularly sad and serious in countries of very high youth unemployment such as Greece (51.8 percent), Spain (48.6 percent) and Italy (40.5 percent).
The question is: Why aren't the German businesses tapping into this huge reservoir of readily available and educated labor force before pushing the government to open the borders and to speed up the processing of migrants from non-EU countries, arguing that they urgently need 550,000 workers to fill existing job vacancies?