domenica 25 settembre 2011

Wages inflation, productivity and unit labour costs

Interesting post form The Economist about the percentage change in Q2 2011 of wages, labour productivity and unit labour costs on the second quarter of 2010 in OECD countries. Broadly speaking, labour productivity grew at a slow pace whereas wages increased. As a result, unit labours costs rose about 2-3% over the last year.
Conversely, two groups of countries show different patterns. Norway and Australia faced a decline in labour productivity and a rise in wage that led to soaring unit labour costs. On the other hand, in Denmark, Netherlands and Austria productivity grew more than wages, thus unit labour costs fell about 1%.
Next, I would like to focus on Italy. Labour productivity growth turned out to be steady so the rise in unit labour costs entirely reflects the wages inflation. This is the main issue in the last decades in Italy. Indeed, tha lack of productivity growth triggers a fall in competitiveness, that is negative expecially for a country that fundamentally relies on exports. To sum up, this chart shows how Italy should do everything to improve its competitiveness and restore economic growth in order to reverse this harmful path.

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