Even though the European Union welcomed 10 new members into its fold on May 1, the mainly former communist countries in Eastern Europe will not enter the euro zone for some time to come. Before they can adopt the common currency, the new member states must fulfill the so-called Maastricht criteria and successfully piggyback their currency to the euro for at least two years with a consistent exchange rate.
Many of the new EU states are already aiming for the first possible entry date. In Poland, the director of the Central Bank hopes the new currency will help speed up economic growth in his country. DW-WORLD interviewed Leszek Balcerowicz about why the euro is so important for Poland's economy.
DW-WORLD: The earliest possible date for introducing the euro into Poland is Jan. 1, 2007. Why have you been such a strong advocate of meeting that date?
Balcerowicz:It's important for Poland to strive to meet the necessary requirements for introducing the common currency as soon as possible. These requirements are listed in the Maastricht Treaty. We meet some of these conditions: Poland has a low inflation rate, for example. But our budget deficit is still too high, just like in Germany. From an economic point of view and for future growth, it would be better to solve this problem rather than ignore it. We need -- regardless of the euro -- fiscal reforms with the goal of reducing our state expenditures. Doing so has the double advantage of buffeting economic growth and opening the doors to the euro. Therefore, it makes sense to begin fulfilling the Maastricht criteria sooner than later.
DW-WORLD: What are the advantages of a quick adoption of the euro in Poland?
Balcerowicz:When people have the same currency, trade improves; and higher exports mean higher growth rates in a country. It's also important for foreign investment to have a common currency. But that all only functions given certain prerequisites, the most important of which, both Germany and France have failed to meet, namely budgetary discipline in the euro zone. Germany and France are not only responsible for themselves, they share responsibility for maintaining the value of the euro.
DW-WORLD:Although the economy is growing, unemployment in Poland is still about 20 percent. What needs to take place in order to get people back to work?
Balcerowicz:First, the minimum wage is Poland is too high. That means that the companies in poorer regions of the country are not interested in creating more legal jobs. Instead they try to hire people through other means. The employment laws are also too rigid in Poland. When I was finance minister between 1997 and 2000, I tried to open up the labor market and make it more flexible, but unfortunately my reform plans were blocked. Poland also has a specific demographic problem, different from that in Germany (where the working population is aging). In the last two or three years, more and more young people have flooded the labor market, and that's expected to continue for a few more years. So you can see, the supply of labor in Poland is continuing to grow without enough jobs being created, and for this reason we urgently need to reform our labor market.