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Recent developments in the wage drift in the euro area

Author

Listed:
  • Koester, Gerrit
  • Guillochon, Justine

Abstract

The wage drift measures deviations in developments in actual wages from developments in negotiated wages. It is an important element in the macroeconomic analysis of employee compensation because it should be closely linked to cyclical developments in the labour market. In a tightening labour market, employers might be compelled to offer pay scales that are higher than those under collective agreements, to promote employees to higher bands within collectively agreed pay scales, or simply to pay bonuses on top of agreed wages as a way to reward and retain employees. Given recent protracted declines in unemployment and increasing signs of labour shortages, this box reviews the role of the wage drift in recent developments in employee compensation. JEL Classification: E24, J30

Suggested Citation

  • Koester, Gerrit & Guillochon, Justine, 2018. "Recent developments in the wage drift in the euro area," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2018:0008:5
    Note: 3015628
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2018/html/ecb.ebbox201808_05.en.html
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    More about this item

    Keywords

    negotiated wages; wage drift; wage growth;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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