Unemployment in Europe is at its lowest rate since records began. In April 2019, the jobless rate across the EU-28 was a mere 6.4%, with Eurozone unemployment coming in only slightly higher at 7.6%. Of course, those numbers hides significant differences between some Member States; in Greece, for example, unemployment is at an eye-watering 18.5%, while Germany is essentially experiencing what economists call “full unemployment”, with an unemployment figure of only 3.2%. Nevertheless, it’s true to say that most European economies are enjoying a period of relatively low unemployment at the moment.
So, crisis over, right? Not so fast. In 2018, the OECD warned of “unprecedented wage stagnation” across Europe. They argue that: “Low inflation and the major productivity slowdown have contributed to wage stagnation, as well as a rise in low-paying jobs” and “a significant worsening in the average earnings for part-time workers relative to full-time workers”.
What do our readers think? We had a comment from Panayotis, from Greece, who complains that European wages have been stagnant for too long. Is he right? Are European wages rising too slowly?
To get a response, we put Panayotis’ comment to Barbara Gerstenberger, Head of the Working Life Unit at the European Foundation for the Improvement of Living and Working Conditions (Eurofound), an EU agency that, among other things, researches living and working conditions across Europe. What would she say?
Well, they have certainly been rising very slowly for a long time, and that is true also for the post-recession period. Between 2012-2014, wage growth has (and certainly for the recipients of those wages) been very disappointing. However, 2015 marked a turning point in that situation and [from that point on] we do see that, in two-thirds of the Member States, real wages have been increasing.
Again, the development in the Member States is very different. We see especially strong wage growth in Eastern European Member States, however we do not yet see this high wage growth in some of the Member States hardest hit by the crisis, such as Greece…
For another perspective, we put the same comment to Jack Ewing, European economics correspondent for the New York Times. How would he respond?
It’s true that wages were stagnant for quite a long time, not just in Europe but around the world. We’re seeing signs now that they’re starting to go up. That’s a function of the fact that in some countries, like Germany, the unemployment rate is very low, and so that forces employers to pay more to get the people that they need. But in countries like Greece, which still have a lot of economic problems, it’s going to take a while before that happens.
Then the question is what are you going to do about that? There’s not a very easy answer. The job market is much more competitive than it used to be, and when you have high unemployment, as you do in Greece, or Spain, or Italy, then employers are not under a lot of pressure to pay more. So, I don’t see an easy solution to that right now.
Are European wages rising too slowly? Do low unemployment rates mask other problems in the labour market? Or will wages rise naturally now that unemployment is down? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!
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Public Portuguese servants,wages don’t rise since 2009,but for those under 635,07 €.Minimum wages : 14 x 600 €,private corporations. 635,07 x 14,public servants.
Yes
When the money goes to the banks, politicians and multinationals..
Yes of course the only possible adjustment of many countries to be competitive is to lower wages. Adjustment cannot be done through currency… And there is no common tax and social policy. Then northern Europe benefit from euro. Southern Europe suffer from euro
Olivier – South suffers from euro due to irresponsible fiscal policy. It has nothing to do with currency actually. They just aren’t competitive. Same currency just shows clearly discrepancies. Having e.g. lira in Italy wouldn’t change much, and as long as fiscal policies looks like that, companies will always prefer countries where they have to pay less.
So I wouldn’t blame euro as a currency as it does just good, but politicians, who have no idea how macroeconomics work.
So I wouldn’t blame euro as a currency as it does just good, but politicians, who have no idea how macroeconomics work.
That’s the problem and the usual excuse. Their should be a cap on how much profit individuals are alowed to gain in any business. I understand profits and growth whatever, still no one needs to live on 20k a month salaries, they don’t contribute to the economy as much as a medium wage.
One think is raising very fast, the corutions.
Yes, many wages in Spain are the same as 20 years ago, while the prices have doubled.
Yes . Housing is too expensive for working class. And a bargain for Euromillionairs that dosent work or produce any value to the Union.
Yeah! Inflation is killing me
Any wonder?
As an “employee” one needs to look at ones personal potential within the EU/National economy considering all accumulated skills, one’s attitudes and believe in the truth of “The Peter Principle”- which expresses it as:
“In a hierarchy every employee tends to rise to his level of incompetence”- then many should be able to conclude the “inevitable”. After reaching one’s level of incompetence not much else is left!
https://www.thebalancecareers.com/how-to-make-more-money-1919076
A disturbing factor is that the EU/National public sectors (incl politicians) have granted themselves over the past decade’s better job securities and better deals than the private sector. They excluded themselves from the rough & tough global & corporate competition rules of supply & demand!
Recent examples: the “s/elected” ones in the EU are competing for the EU Spitzenkanditat & JCJunckers job- or as close as possible! Same as the present- but ridiculous- UK competition for the new PM post. All very unhealthy & unproductive situations!
For the normally employed- “genuine” entrepreneurs excluded:
*) Higher earnings depend mainly on promotions to more senior positions with more responsibilities. Such conditions are no secret. To expect increases by counting years of service by doing year in & year out the same job- has no real basis is production.
*) As all western consumers do, the majority is shopping for the cheapest product. These come nowadays from China. The West has relocated its production to China and they in turn managed to lift “hundreds of millions” of their own 1.3 bio people out of poverty. While the EU abdicated and chose stagnation and social security instead.
https://www.worldbank.org/en/country/china/overview
China is ranked 3rd on the global scale & has 1,535,473 (7.8%) “Millionaires”!
Eat your hearts out! If you don’t like it- don’t buy made in China but Made in Europe to generate production at home!
https://mgmresearch.com/global-millionaire-population-analysis-2019/
……………..and the Chinese steam train is doubling up with the 2nd Belt & Road Development!
https://eng.yidaiyilu.gov.cn/brficpc.htm
…………….and the EU remains paralyzed and has no answers! What a “bright future for the EU to become the next province of China. After Tibet?
Is that “EU economic greatness for all”?
Wages are low because it is less profitable for businesses to pay higher wages. For local businesses it is because their costs are high and revenue is mediocre. For some corporations it is so they can be more competitive in global trade. For other corporations it is to please the shareholder. That leaves a logical solution of lowering the basic wage EU-wide and subsidise it with a GMI to bring it up so everybody is happy.
Yes, especially in Eastern Europe. Prices have reached average European levels but wages are 30% of average European resulting in low living standards. I totally support idea about equal fixed minimum salary for all EU countries.
Are they rising though?
No european taxes are rising to fast to pay for the benefits of euro officials
We should be explained why in the EU instatutions, the wages are on avarage 6x the avarage minimal wage in the eu.
Live in belgium is getting Verry exspensife
Wage is something you need to define in terms of the cost of living and taxes. In most Européan countries income tax has inceased from 10% in the1960s to 30% today, 3 times. But the wages have increased at least 10 times, which means the average salary, for example, was 500 euro in 1960s and 4000 euro today. But an average person hardly can survive with 4000 euro in Sweden because tax takes half of that and high cost of living swallows the rest. The conlusion is in real economy, lower tax and lower cost of living are far better option than rasing the salary year after year. To have a deeper idea how the system of low cost of living and low tax work, Singapore and Malaysian are good examples.