WAGE TRENDS IN EUROPE ZSSS SEMINAR ON THE MINIMUM WAGE IN SLOVENIA Lubljana, 16th of June...
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WAGE TRENDS IN EUROPE ZSSS SEMINAR ON THE MINIMUM WAGE IN SLOVENIA Lubljana, 16th of June [email protected]
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Transcript of WAGE TRENDS IN EUROPE ZSSS SEMINAR ON THE MINIMUM WAGE IN SLOVENIA Lubljana, 16th of June...
WAGE TRENDS IN EUROPE
ZSSS SEMINAR ON THE MINIMUM WAGE IN SLOVENIALubljana, 16th of June
THE CRISIS IS TAKING ITS TOLL ON WAGES
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
1
2
3
4
5
6
7
NOMINAL WAGES PER HEAD, ANNUAL % CHANGE
Euro Area UK
INSIDE EURO AREA, SOME REBALANCING IS GOING ON
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-2
0
2
4
6
8
10
12
NOMINAL WAGES PER HEAD ANNUAL % CHANGE
Germany Slovenia
AT THE MOMENT, WAGE PURCHASING POWER IS SAVED BY FALLING PETROL PRICES
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-3
-2
-1
0
1
2
3
4
REAL WAGE ANNUAL % CHANGE
Euro area Germany Slovenia UK
HOWEVER, THE STRUCTURAL TREND BEHIND HEADLINE NUMBERS IS DEFLATIONARY: ZERO UNIT WAGE COSTS IMPLY ZERO INFLATION
97 98 99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1
0
1
2
3
4
5
EURO AREA, INFLATION AND UNIT WAGE COSTS
Nominal Unit Wage cost changes Annual inflation
UNIT LABOUR COST 2015 MUCH BELOW 2% INFLATION TARGET IN MAJORITY OF EURO AREA MEMBER STATES
Euro Area
BE DE IRE EL ES FR IT CY LV LT LUX MT NL AS SL PT SK FI PL
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
ANOTHER DISMAL STRUCTURAL TREND : REDISTRIBUTION FROM WAGES TO PROFITS
…..AND THIS IS NOT A NECESSARY CORRECTION OF PAST TRENDS !
…. CONTINUED….
INTERNAL DEVALUATION: SO FAR QUITE A « SUCCES » STORY INDEED…..
-15 -10 -5 0 5 10 15
-10
0
10
20
30
40
50
60
70
80
BE
DE
EE
IR
EL
ESFRIT
CY
LV
LT
LUX
MTNL
AS
PT
SL
SK
FI
CHANGE IN UNIT LABOUR COSTS AND EXPORT VOLUMES 2009-2013
Change in unit labour costs
Chan
ge in
exp
ort v
olum
es
SAME GOES FOR ‘UNAVOIDABLE’ TRADE OFF : WAGES OR JOBS
-12 -8 -4 0 4 8 12-5
0
5
10
15
20
0.5
-2.4
1.1
17.9
8.2
1.2
4.4
0.800000000000001
3
0.100000000000001
5.7
0
Changes in Unit Labour Cost (2009-2013 and in the unemployment rate (2009-2013)
% ULC change (2009-2013)
Chan
ge in
une
mpl
oym
ent r
ate
( 20
09-2
013)
HOW TO EXPLAIN THE FAILURE OF INTERNAL DEVALUATION ?• Export driven boom difficult to achieve for relatively closed economies or
economies that do not have a sufficient industrial basis• What work for one of us, can not be a solution for all of us• Cutting wages, in the end, leads to disinflation, even deflation, automaticaly
increasing the real burden of debt, squeezing domestic demand further and disabling the banking sector (non performing loans). • Breakdown of euro area monetary policy transmission channel: No exports
without (export) credits• Workers pay (higher) taxes, corporate profits don’t. Redistribution from
wages to profits increases public deficit. Perverse feedback loop from austerity policy and its targets.
CONCLUSION : WAGES HAVE SEVERAL « MASTERS TO SERVE » THAN « COMPETITIVENESS » ONLY
• Engine of aggregate demand, thus jobs,growth and investment• Price stability• Workers’ security of revenue• Fair wage, fair distribution• Promotes productivity (and innovation) by forcing employers to re-
organise the work place in better ways.
