Why is everything more expensive in Europe ?

How do businesses in Europe manage employee benefits? Is the minimum wage high? Are workers unions pretty strong over there (thinking dock workers truck drivers). Thinking about the transport with higher fuel prices transport prices will be higher has well.

Is it easy to change careers? If not then there'd be a smaller workforce available for speciality jobs driving wages up.

For luxury utilities like broadband think about is it widely used? Are there competing companies, were they just recently set up?

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Originally Posted by Divinus Arma

Say I agree to import to Europe at an exchange rate of 1$/1Euro. We sign the contract, but over the course of the year, the exchange rate changes to $.075/1Euro. I just took a 25% hit in revenues because of our agreed upon contract. Now there are ways to mitigate this through currency forward contracts, hedging, etc, but I am likely to still experience some transaction exposure. Of course, conversely if the dolalr should rise against the Euro than the European company takes a hit and I get an unanticipated increase in revenue.

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Prices went up when the Euro went up though, and they went up when the Euro went down again. I'm not sure how supplier-retailer contracts work over here and how 'set' they are.

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Now that is just currency fluctuation. Let's talk about the general relationship between international transactions. As a European country, there are a host of trade agreement the EU or your individual nation might have with regional players, Asian, North America, etc. If Europe does not have a free trade agreement on ceertain products in certain regions, you may be experiencing the effects of tarriff on imports to your country. This is going to raise distribution costs for the country of origin and this will be passed on to teh consumer: you. Protectionist policy in Europe may contribute to unreasonable tarriffs protecting industries that the governments seek to protect until the domestic industry can become competetive globally. In essence, your government may be attemtping to place an industry in an economic incubator before relaeasing it to the wolves of international free trade.

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I don't think the electronics sector is being protected much. The only European global player I can think of is Philips, and since their production is almost entirely done by subcontracting I can't see them supporting high import tarrifs. AFAIK we only really protect the agricultural sector to a great degree. We import pretty much all manufactured goods anyway (except cars), so high import tarrifs would have a negative effect on our economy.

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And let's not forget that even imports to your country will still experience many of the domestic costs, depending on the level of FDI into your country. Imports, while generally cheaper and easier to the importer in the short run than a wholly owned subsidiary, incur enormous transactions costs, distribution costs, etc. On the other hand, subsidiaries suffer from intense local regulation of a semi-socialist economic model.

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Seeing the level of transporting going on for all products I don't think you should overestimate the transport costs. We import millions of tons of fruit from southern africa and still manage to sell them for 2-3€, electornic goods are smaller and lighter (a piece), don't require refrigeration, don't have to be transported as fast, but do require special care of their own. Really, I don't see a 10€ price difference between the US and here due to transport costs, I'm willing to accept 2€ or so, but not more.

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Sorry. Lot's of spelling errors here that make me look like an idiot. But I hope you get the picture.

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Nah, thanks for giving me a lengthy reponse. there's probably a lot of mistakes in my post too, spellecheck doesn't check above quoted parts it seems.

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Bottom line, if you want to drop the prices of imports to your country, then you need to support deregulation, lower wages, and free trade agreements with competitor nations.

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I still blame the consumer's willingness to pay first and foremost. Like I mentioned in a previous post, the price difference between 2 stores, less than a mile apart can be nearly 10€. According to 'normal' economic theory the expensive store should go bankrupt almost instantly...

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Originally Posted by spmetla

How do businesses in Europe manage employee benefits? Is the minimum wage high? Are workers unions pretty strong over there (thinking dock workers truck drivers). Thinking about the transport with higher fuel prices transport prices will be higher has well.

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Transport will be higher than they are in the US, certainly per mile, but Europe also has a lot of ports so transporting something for thousands of miles by truck doesn't need to happen. Like I mentioned in my previous post, we import cheap stuff too, I don't see how transport costs can eb that high then.

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Is it easy to change careers? If not then there'd be a smaller workforce available for speciality jobs driving wages up.

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Retail ? Usually student or kids just out of school and such, I don't see them making too much. Truck drivers and such are paid handsomely, but like I said in my previous point it doesn't account for the huge price difference.

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For luxury utilities like broadband think about is it widely used?

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Errr... depends on how you define widely used of course, we're a small country, tightly packed. pretty much every town has acces to cable internet if they want it I believe.

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Are there competing companies, were they just recently set up?

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That's part of what I was complaining about. Despite our major criticisms about the US and chains like McDonalds, I see a lot of oligopolies or even monopolies here. This is true for electricity, cable, adsl, cell phone networks, some retail, etc.

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Originally Posted by spmetla

How do businesses in Europe manage employee benefits? Is the minimum wage high? Are workers unions pretty strong over there (thinking dock workers truck drivers). Thinking about the transport with higher fuel prices transport prices will be higher has well.

Is it easy to change careers? If not then there'd be a smaller workforce available for speciality jobs driving wages up.

For luxury utilities like broadband think about is it widely used? Are there competing companies, were they just recently set up?

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Details of UK minimum wage:

"The minimum wage is a legal right which covers almost all workers above compulsory school leaving age. There are different minimum wage rates for different groups of workers as follows:

The main rate for workers aged 22 and over is currently set at £5.05 an hour. On 1 October 2006 this will increase to £5.35
The development rate for 18-21 year olds is currently set at £4.25 an hour this will increase to £4.45 on 1 October 2006
The development rate for 16-17 years olds. This rate is £3.00 an hour. This will increase on 1 October 2006 to £3.30 an hour"

(As age discrimination legislation comes in later this year, there is some debate about whether having three different rates will still be possible.)

Benefits, employee rights and union strength vary a lot between European countries. For instance, in Britain there is fairly weak legislation that employees can't be required to work an average of more than 48 hours per week. In France they tried a 35 hour maximum (but I think that was revoked at some point). I have colleagues that occasionally have to work in one of our German offices, where there are also regulations on when people can work.

Move to Mexico. Then illegally immigrate into the United States. We will give you amnesty and better benefites than our own citizens. You'll be rich beyond your wildest dreams at the expense of evil American capitalist pigs who rule the world with an iron fist of military tyranny.

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Originally Posted by Divinus Arma

You'll be rich beyond your wildest dreams at the expense of evil American capitalist pigs who rule the world with an iron fist of military tyranny.

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That's the biggest load of rubbish I've ever read in a single sentence!

You know full well that few illegals are rich. ~:)

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Originally Posted by Louis VI the Fat

That's the biggest load of rubbish I've ever read in a single sentence!

You know full well that few illegals are rich. ~:)

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Yes Louis but you'll be one of the few smart illegals that'll give you an edge.:2thumbsup:

So consumers that don't shop around and a lack of competition sound like the main culprits. I'm not an economist by any means but I'm surprised to find that stuff costs more there than here. I thought only electronics and oil we had better prices than you.

UK's minimum wage doesn't sound that bad. What do you pay for more common items like milk, beef in the UK. What's a CD or DVD go for?

OK best way to do this is to put a price comparison down
Please fill in the same data

£1 - $1.8596
£1 - Euro 1.4716

The Da Vinci Code
Price at Tesco £3.89 ($7.23 or EUR 5.72)
Price on Amazon £3.99 (Amazon US $7.99 or EUR 6,47 Germany Amazon)
(RRP £6.99) or ($12.99 or EUR 10.29)


Stadium Arcadium by Red Hot Chili Peppers

Price at Tesco £10.99 ($20.43 or EUR 16.17)
Price on Amazon £10.99 (Amazon US$11.98 or EUR 17,95 Germany Amazon)



FOOD

MILK - Tesco Healthy Eating Semi- Skimmed Milk 3.408ltr/6 Pints
£1.50 ($2.79 or EUR 2.21)

Finest 1 Sirloin Steak - £14.98/kg ($27.86/KG or EUR 22.04)


Coca Cola Regular 2 Ltr Bottle - £1.20 ($2.23 or EUR 1.77)

Its very hard to compare food as generally we eat differently to europe or the US, but this should give a little bit of a comparison.

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Originally Posted by ShadesWolf

Stadium Arcadium by Red Hot Chili Peppers

Price at Tesco £10.99 ($20.43 or EUR 16.17)
Price on Amazon £10.99 (Amazon US$11.98 or EUR 17,95 Germany Amazon)

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That´s insane, I pay more than twice as much as the guys in the US, and import costs don´t count, since music and games can be imported via the internet. We can make the CDs here.:furious3:

I suggest u go on holiday to America. I just have :2thumbsup: