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16 Sep 2015
Eurozone: Wage growth is northwards bound - ING
FXStreet (Delhi) – Bert Colijn, Research Analyst at ING, notes that the real wages in the Eurozone are growing at a rapid pace even when the inflation figures remains tepid.
Key Quotes
“According to Eurostat, Eurozone nominal labour costs grew by 1,6 percent year-over-year in the second quarter, which is down from 1,9 in the first quarter. The trend over the past quarters has been slightly positive, which is in line with the recovery in employment, but historically the current rate of growth in labour costs is weak.”
“This is to be expected given the slow rate of recovery in the European job market, but this does not mean that the growth in real wages in the Eurozone is also failing to recover. The weak inflation rate, mostly due to lower oil prices, together with the slow growth in wages and salaries have resulted in much stronger growth in real wages in the Eurozone than many expect, 1.9 percent in the second quarter.”
“In fact, when looking at real wage growth in the business economy, it becomes apparent that current growth is more than a full percent higher than average real wage growth in the business sector between 2000 and 2007: 1.9 percent versus a mere 0.7 percent as a pre-crisis average.”
Key Quotes
“According to Eurostat, Eurozone nominal labour costs grew by 1,6 percent year-over-year in the second quarter, which is down from 1,9 in the first quarter. The trend over the past quarters has been slightly positive, which is in line with the recovery in employment, but historically the current rate of growth in labour costs is weak.”
“This is to be expected given the slow rate of recovery in the European job market, but this does not mean that the growth in real wages in the Eurozone is also failing to recover. The weak inflation rate, mostly due to lower oil prices, together with the slow growth in wages and salaries have resulted in much stronger growth in real wages in the Eurozone than many expect, 1.9 percent in the second quarter.”
“In fact, when looking at real wage growth in the business economy, it becomes apparent that current growth is more than a full percent higher than average real wage growth in the business sector between 2000 and 2007: 1.9 percent versus a mere 0.7 percent as a pre-crisis average.”