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Great Graphic: Real Wages

This Great Graphic caught my eye.  It was tweeted by Ninja Economics.  Her point was about immigration.  German had much higher immigration than the UK, but also saw real wage increase of nearly 14% in the 2007-2015 period, while real wages in the UK fell nearly 10.5%.

She noted that Greece is the only developed country where real wages have collapsed as much as in the UK.  This is amazing, and not because of immigration.  Rather, since 2010 the Greek economy has collapsed by more than a quarter, while UK economy is somewhat bigger than it was in 2007.  Moreover, by many economists’ reckoning, the UK alongside Germany, Japan, and the US are near or approaching full employment.   At the demand of its official creditors, Greece has had to cut wages and benefits,  On top of that Greece has been in deflation since the end of 2013.

There is a bright spot that ought not be lost.  The stronger real wage increases in Germany may speak to a slowly changing competitive landscape within the eurozone.  The stronger real wage increases in Germany likely mean higher unit labor costs (wages, benefits, and productivity) and is one way that the periphery of Europe can narrow the gap with Germany.

What is also evident in the chart, though not the subject of the tweet, is the competitiveness of the US.  Real wage growth in the US has been a little below the OECD average, while Germany is twice the average.

Real Wages 2007 - 2015

Real Wages 2007 - 2015

- Click to enlarge



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Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.
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