The current lack of political strength and unity in France, Italy, and Germany has resulted in an inability to respond to the pressing needs of economic reform. Each country has been struggling with high rates of unemployment and other economic problems without a strong government capable of addressing these issues.
By contributing two thirds of the European Union's GDP, France, Italy, and Germany are without a doubt among the EU's most dominant players. However, with their current economic problems and instability, future complications for the EU may arise.
In Italy, recent elections have weakened government political power. Romano Prodi won the election for prime minister by the tightest margin possible. This, however, means that he will be in no position to pursue a bold agenda of economic reform. Even though the election results are still being contested, the most probable outcome is that Prodi's center-left Union party will control both houses by a wafer-thin margin. Unfortunately, however, Italy's economic problems are structural rather than cyclical and will need a strong and unified government to solve them.
As for France, the government has caved in to the massive street protests. On April 10, President Chirac formally terminated the controversial youth job contract known as contrat premi??re embauche. This turn of events has been rather humiliating for both Prime Minister de Villepin and President Chirac as demonstrations reached such a level of intensity that universities were forced to close for a month.
In Germany, the political situation is similar to Italy. Angela Merkel is a relatively effective chancellor, but she does not have a strong enough coalition to carry out effective reforms. In fact, the internal grand coalition is highly divided.
As for economic conditions, each country has its own set of problems. Italy has the weakest private sector of the three countries. According to the European Economic Advisory Group at CESifo in Munich, total factor productivity growth has fallen to very low levels in all three countries.
Furthermore, labor markets are weak. Unemployment rates in December of 2005 were 9.5 percent in Germany, 9.2 percent in France, and 7.7 percent in Italy. These are high rates compared to the 4.9 percent rate in the United States and United Kingdom. In France and Italy, more than 20 percent of people under the age of 25 are unemployed.
It has been argued that if these countries do not respond to their economic problems with feasible solutions, it could severely affect the economic status of the European Union. The European market is largely dependent on the economic stability of these three countries. Small, but important steps must be taken to improve conditions.
It is often said that it is difficult to achieve quick, effective solutions for a nation's economy through a democracy. One underlying problem is the education system. Young people come out of universities with degrees of no value. Also, many young people are ill-qualified for various jobs simply because the education system is so old-fashioned.
It is a system based on a tradition of fitting the demands of an industrial society. However, in a post-industrial world, past educational traditions must change to meet these new post-industrial demands.
On the other hand, this political turmoil can also be looked upon as a test of democracy. Mass protests in France are not unprecedented, as they have occurred in 1986, 1994 and 1995. An important aspect of democracy is the responsibility of a government to meet the demands of the people. As of now, the democratic governments of France, Germany, and Italy have fallen short of meeting this demand. The people demand economic reform, but in each case there is a weak government that may not have the power to solve these problems.
Despite current low levels of trust in democracy in France, some argue that democracy will force a government to find a solution to meet the demands of the people. One to three million people were not happy with the new youth labor contract and it was annulled by Chirac. However, an argument against the current democracy is that it is too slow to respond to such a sudden shift in demand by people.
If the education system is in fact at fault, it will take a while to change the outdated culture of French schools. Consequently, people may not have the patience for this process and become more disgruntled by the democratic system. The fact that the democratic system is even being questioned by France, a long-standing symbol of democracy, shows how dire the situation truly is.
