Unemployment in the world’s biggest developed economies has been falling, at least since the end of the financial crisis. But wages, in the main, have not reacted as might be expected.
They have generally either grown only modestly, or even fallen.
Take, for example, resurgent Germany. Since 2012, the unemployment rate has tumbled to the lowest level since reunification. Wages and salaries have grown -- but only gradually and at nothing like a rate to imply pressure.
The more-workers-less-pay-growth phenomenon, meanwhile, is the subject of a new report from International Monetary Fund economists Gee Hee Hong, Zsoka Koczan, Weicheng Lian and Malhar Nabar.
They find the disconnect between unemployment and wages to be the result of a number of factors -- including the slowdown of productivity -- that are relatively new and which are probably not going to go away.
A second factor is, in effect, the impact of globalization and a more integrated global economy.
“(Playing a possible role are) the threat of plant relocation across borders, or an increase in the effective worldwide supply of labor,” the economists found.
Interestingly, a third factor -- automation -- was not found by the IMF team to have had a major impact, at least yet.
Reference: Reuters
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