Recent developments in the wage drift in the euro area

Gerrit Koester and Justine Guillochon

Economic Bulletin Boxes, 2018, vol. 8

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

Keywords: negotiated wages; wage drift; wage growth (search for similar items in EconPapers)
Date: 2018-12
Note: 3015628
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