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Assessing wage dynamics during the COVID-19 pandemic: can data on negotiated wages help?

Author

Listed:
  • Koester, Gerrit
  • Benatti, Nicola
  • Vlad, Aurelian

Abstract

Can the indicator of negotiated wage rates play an especially important role in assessing and forecasting wage dynamics at the current juncture? While the data on negotiated wages are available on a more timely basis, negotiated wage growth tends to only react with some lag to changes in labour market conditions, owing to the nature of the negotiation process, and the indicator is currently still dominated by wage agreements agreed prior to the pandemic. The main effects of the pandemic on negotiated wage growth are likely to become visible only from 2021 – when a substantial share of wage contracts in euro area countries is due to be renegotiated. Wage drift developments, in conjunction with information on hours worked and unemployment, can provide some indications regarding the environment in which these negotiations will take place. The availability of more granular data, for example on negotiated wage growth in different sectors, would be very helpful in analysing euro area wage developments in more detail. JEL Classification: H24, J30, J31

Suggested Citation

  • Koester, Gerrit & Benatti, Nicola & Vlad, Aurelian, 2021. "Assessing wage dynamics during the COVID-19 pandemic: can data on negotiated wages help?," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2021:0008:7
    Note: 3015628
    as

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    More about this item

    Keywords

    compensation; negotiations; pandemic; wage drift; Wages;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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