Janssen, R. (2014) “European Wage Depression Since 1999“, Social Europe Journal, 30 May.
Probably one of the most popular slogans of the entire European Semester is the catchphrase that wages should be aligned with productivity. The reason for its popularity is that this phrase can be used with a lot of flexibility.
On the one hand, the Commission can make use of it to discipline wages and undermine national systems of wage formation, a trend which has become all too common in many member states these last years. On the other hand, when being accused of biased against wages, the Commission can refute this accusation and claim that its approach is balanced and fair since it is pushing for stronger wage increases in those countries where wages have lagged behind productivity developments.
The latter, unfortunately, is far removed from what the Commission is actually doing in practice. As I will argue in this text (and a full study is available here ), there is a large and growing majority of member states that is suffering from wages staying behind productivity and this dismal development is not at all being reflected in the Commission’s country specific recommendations. On the contrary, the Commission’s approach is instead based on the assumption that the opposite is the case and that wages have seriously outpaced productivity developments and need to be brought back down so as to restore equilibrium.
Relevant posts:
- Onaran, O. & Stockhammer, E. (2014) “Raising wages should be a key component of economic growth strategies across the world“, LSE EUROPP, 07 May.
- European Commission (2014) “Government wages and labour market outcomes”, European Economy. Occasional Papers, April 2014: Brussels.
- Mabbett, D. & Schelkle, W. (2014) “The lack of monetary sovereignty is not the reason Eurozone countries struggled during the crisis“, LSE EUROPP, 04 April.