Thursday, October 20, 2011

Where Exactly Are Those Lazy Southern Europeans, Anyway?

The northern eurozone countries are facing the prospect of coming up with massive amounts of additional funds to avert the collapse of Europe's financial sector. There have been some hints from various sources that a major and decisive agreement will be reached this weekend... though if the eurozone crisis has taught us anything, it is that one should never underestimate the power of European policy-makers to dither and delay beyond all reasonable expectations.

At any rate, lots of people (primarily but not exclusively in northern Europe) are very angry about the massive cost of fixing the eurozone mess. Understandably so. But unfortunately, much of that anger has been specifically directed at those lazy, shiftless, irresponsible southern Europeans that are seen to have gotten the eurozone into this mess to begin with. It's not difficult to find such finger-pointing expressed in the statements of prominent European officials, or in commentary on blogs and news sites.

I've repeatedly argued that I strongly disagree with this placement of blame; the eurozone crisis was fundamentally caused by the massive flow of capital from the north to the south of Europe that was bound to happen once the euro was adopted, and the specific behavior of individual governments in southern Europe had little to do with it. But I realize that this is a relatively abstract economic argument -- albeit one with substantial theoretical and empirical support. Stories of impersonal capital flows somehow don't address the gut feeling that lots of people have that southern Europeans really are less hard-working and responsible than northern Europeans, and that those laid-back southern attitudes must have caused the crisis.

I understand that gut feeling. That's part of what people like about southern Europe, after all -- things there do tend to move more slowly than in the north. But sometimes that gets confused with inefficiency and laziness, and turned into a moral judgment.

For some people, such judgments can be traced back to their own experiences... such as that day on vacation somewhere in southern Europe when they suffered through terrible service at a restaurant, got food poisoning, found that every pharmacy was closed for an extended lunch break in the middle of the afternoon, and then attempted navigate an incredible amount of paperwork and government bureaucracy to register a simple complaint. (No, I'm not speaking from personal experience at all. Why do you ask?)

In other cases the moral judgment of the south is probably more abstract and theoretical, and is simply following in the tradition of Weber's Protestant Ethic and the Spirit of Capitalism. Suspicion of the character of southern Europeans is not at all new.

But either way, being the economist that I am, I've been looking for some data to provide more insight into what lies behind this notion that southern Europeans are indeed a bunch of lazy free-loaders. Here's what I've found so far. Note that each table shows four northern eurozone countries and then four southern eurozone countries. Data is from the OECD.

Southern Europeans tend to work more hours each year than northern Europeans. But perhaps this is made up for in the north by greater participation in the labor force...

No, with the exception of Italy, it appears that the percentage of the population that is an active part of the labor force is generally similar to labor force participation rates in northern Europe. Germany appears to compensate for the few hours that its people work by having more people working in the first place.

So let's turn to the productivity of that labor. We know that labor in southern Europe has always been less productive than in northern Europe (for the past few centuries, anyway)... but have they been falling even further behind?

Labor productivity grew incredibly rapidly in Greece in the years leading up to the crisis. Even much-maligned Portugal enjoyed improvements in labor productivity roughly equal to northern Europe. Interestingly, it was Spain and Italy -- two southern European countries that did not run particularly large budget deficits (Spain even ran a budget surplus), and for which capital flows from northern Europe financed private investment rather than government spending -- that lagged in productivity growth. This again calls into question the common notion that large budget deficits in southern Europe are to blame for the crisis.

Now let's look at the social welfare system. In addition to being lazy, southern Europeans are accused of simply living off the state. So here's the amount of social welfare spending per capita:

Northern European countries give their people considerably more state assistance than do southern European countries. Greece and Portugal give by far the least, though we must recognize that incomes in those countries are much lower in general. But even Italy provides less social support to its citizens on a per capita basis than any of the northern European countries, and in 2007 Italy's per capita GDP was about the same as France's.

Just to be sure, though, let's take a look at a specific kind of public assistance expressed as a percentage of GDP: state pensions.

With this measure Italy does indeed appear to spend more on pensions than northern European countries. Of course, Italy also has one of the oldest populations in the world on average, which might explain that difference. Regardless, pensions in the rest of southern Europe are not particularly generous, even relative to income, when compared to northern Europe.

Putting it all together, it's hard to see much empirical support in this data for the notion that southern Europeans are a bunch of lazy free-loaders. That's not to say that there aren't obvious cases of gross inefficiencies in southern European countries -- of course there are. And there are probably other types of data that I haven't thought of that should be examined as well. Feel free to offer suggestions. I've focused on the types of data that, to me, most obviously and directly speak to the common criticisms of southern Europeans, but perhaps I've missed something.

Alternatively, maybe there really isn't a systematic difference in how hard-working, responsible, or self-reliant southern and northern Europeans are. After all, it is also possible to find plenty of examples of opaque government bureaucracies, entrenched unions, and extremely generous state assistance in the northern eurozone countries. So the next time someone asserts that southern European irresponsibility is what lead to this crisis, I would simply ask to see the data they have to support that claim.


  1. Anonymous12:31 PM

    My view's really very straightforward, the crisis was caused by more money being lent to people/companies/governments than they were ever going to be able/willing to pay back. The problem we have now is that no-one wants to pay for those losses. So we provaricate about how lazy the southerners are to convince ourselves that they deserve to be bled dry so the people who lent them the money in the first place can avoid paying for their rmistakes. Personally, I would much rather see large chunks of the financial system collapse due to losses incurred on bad loans because at least then, after a few years of depression while the economy adjusts, we could get back to normal. As is, paying for these losses is going to drag down the western economies for at least a decade. 

  2. 4ernokop2:46 PM

    Thanks, very interesting. But comparing growth rates (of labour productivity) does not allow us to compare the actual levels of productivity. I'd be curious to also look at comparisons of average women's participation in the labour force, grey/shadow economy share of GDP; levels of corruption; ease of doing business. EU structural funds transfers to these countries and their effect are another topic worthy of examining. For some of these the OECD may not have data (or not the best data) but there are credible sources.

  3. Anonymous8:28 PM

    What about percentage of workforce in government service?

  4. Ger Tre5:26 AM

    sunhmeno sthn anoixth epistolh pros merkel

  5. Real North8:01 AM

    More correct definition for Austria, Belgium, France and Germany would be Western-European countries. I believe that the comparable results would have been different if you would have used real Northern-European countries Sweden, Denmark, Norway and Finland! After all, it is France that faces the threat of degrading of its credit rating by S&P and others. Real northern countries are the only ones still standing strong in the mess.

  6. Greeks are some of the hardest working people in the world. Their problem is they have a bloated government and don't pay for it, hence the massive public debt. Greeks aren't lazy. They're socialist tax dodgers.

  7. <span>Thanks for the interesting analysis! You have some interesting points but I think you're missing the main point of Government Ineptitude (with Ineptitude being a dramatically understated euphemism). Being a Canadian that live in "Northern Europe's" Finland, I can say you pay a fair bit of taxes but you actually get services for it up here, as opposed to what the OECD data shows about the our Southern Neighbors. </span>
    <span> </span>
    <span>Europe has basically allowed a system to develop where highly Sophisticated and Shark-ish Bankers have talked up significant transaction revenue/bonuses for themselves, by overselling selling “Southern European” Debt to Themselves (both their own Bank’s Fixed Income Team or to Other Banks’ Fixed Income Teams) and their other Institutional investors. Your analysis highlights how little of those state borrowing has actually been used to fund social programs, so where has it all gone? </span>
    <span> </span>
    <span>Answer: Politicians and their Economic Cronies pocket’s. </span>

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  9. Pedro Gonzalez6:54 AM

    If you go to 
    you can get European statistics up to Q2 2011.

    You can see for instance
    --Productivity index (2000=100) per peson employed in Spain as of Q2 2011 is higher than in Germany
    --Real labor unit cost index is lower in Spain than in Germany
    --GDP (ppp) / Employed person is higher in Spain than in Germany

    May be you can redo your article with the latest statistics. You story will be even more interesting.

  10. Anonymous5:07 PM

    Not if all north europeans are as useless as you are using the web.

  11. Kocho Kosog2:38 PM

    Greece shows surprising results in the survey. They seem to have a better work-ethos than anticipated, but we can dispute the data, cause the State, where nearly half of wokforce is employed, they keep phoney accounts, including fake overtime work. In the private businesses, it is true that the workforce there is trully overworked and not payed accordingly, but that accounts for only a fraction of the total workforce

  12. Kocho Kosog2:56 PM

    Greece can boast the largest number of self-employed business-people. They work hard to keep their small businesses open, having to operate in an environment characterised by slow and often corrupt beaurocrats, corrupt business competitors, a sinister banking system, backward utilities and slow services and a maze of laws that even the smartest western lawyer would not be able to make any sense of.

  13. Anonymous1:22 AM

    This is OECD data, gathered and compiled independently of individual state records, via select visits and corss-referencing of multiple indicators. Fake data is easily revealed and discarded via statistical analysis. 

  14. <span>Thanks very much for this article. As a spanish person that has lived in northern Europe and has heard people calling us lazy when they work only few hours, etc. and they seem very much the lazy ones to me.</span>

  15. Mainman6:37 AM

    There are more Porsche in Greece as people declaring more than 50.000€ income p.a.

  16. Hmmm, be careful with that little new urban legend about the Porsches, it's been later shown to be mistaken, a case of sloppy and sensationalist journalism

  17. Chryssula Kokossulis5:26 AM

    Great article. Well researched. Recommended this as a read to some of my friends and also twittered it and placed it on xing.

  18. South europeans are lazy and thats a fact, my country especially. 

  19. Anonymous8:04 PM

    not so lazy after all?

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