Chart of the Day: Eurozone wage growth, pre-crisis

I ran across this chart on the growth in compensation per employee in the eurozone pre-crisis. It comes from the German Institute for Economic Research, the same institution that believes German banks need 127 billion euros of additional capital (Hat tip billyblog).

Notice that 10% ‘internal devaluation’ in Germany took eight years. We are talking now about 20-30% wage and price cuts in Greece and Ireland. How realistic is that?

P.S. – what does this mean for ‘competitiveness’ in Finland and Spain? Update: regardless of the source, I can’t get the numbers for Spain to mesh with the known increase in compensation and labor cost. I find it surprising that these numbers would show a decline.

Eurozone wage growth

Source: Real Wages in Germany: Numerous Years of Decline (PDF), DIW


Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.