Per latest ECB data, Euro area wages grew by 2.1% in annualized terms in Q4 2009, despite the economy remaining near zero growth and despite the fact that any recovery is tenuous at the very best. In the entire period of the current crisis, wages in the Euro area have shown no signs of declining. Two charts below illustrate the point that Euro area economy is not gaining any competitiveness when it comes to labour market.
This pretty much means that we are now boxed into the situation where medium term devaluation of the Euro is a requirement.
Oh, and when it comes to Ireland - see for yourself - chart below combines ECB data with the Central Bank of Ireland data on Average Hourly Earnings Index in Manufacturing:
We really are in a league of our own...
Wednesday, February 24, 2010
Economics 24/02/2010: Wages, Euro and the crisis
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The Euro was a miscreant from its inception and it will drag all that used it with them (not that the US or UK are any better of).
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