The empirical case for a wage-led recovery
The Europe 2020 strategy of the European Commission (EC) as well as the national reform and stability programmes attribute a central role to wage moderation policies. Real wage growth below productivity growth and policies to deregulate the labour market in order to achieve this are recommended to increase the international competitiveness of the EU. However, the track record of these policies in the last three decades has been poor growth performance along with a declining share of wages in national income and rising inequality.
By Ozlem Onaran, Professor of Workforce and Economic Development Policy, University of Greenwich (UK) and Thomas Obst, PhD Candidate, University of Greenwich (UK)