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Tuesday, June 4, 2013

Saddled with massive debt, Europe has been struggling to come out of a slump. But economic recovery is hardly taking place. In the meantime, unemployment in some of the European countries such as Spain, Greece and Italy has only soared. Take Spain for instance. Youth unemployment in the country has risen to a record 57.2%. And this has compelled the country to come out with a radical solution. Indeed, the Bank of Spain has recommend that the country suspend the minimum wage mechanism altogether. It believes that this will enable Spain to tackle its problems of unemployment. The relevance of minimum wages has been going on as a debate for quite some time now and is a thorny issue. Those in favour argue that it puts more money into the hands of the families enabling them to better their standard of living. Those against it opine that minimum wages only cause employers to find ways to circumvent it. This is because employers will prefer not hiring those people whose produ ctivity is lower than the wage being offered. This probably explains why the youth unemployment in Spain has soared. Young workers find it difficult to secure and hold on to jobs and employers probably think it better not to hire them. Whether doing away with these wages will solve the problem remains to be seen. But given that so far no other measures have worked, it seems like a solution worth carrying out.

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