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Wages and prices in Italy during the crisis: the firms� perspective

Francesco D�Amuri (), Silvia Fabiani (), Roberto Sabbatini (), Raffaele Tartaglia Polcini (), Fabrizio Venditti (), Eliana Viviano and Roberta Zizza ()
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Francesco D�Amuri: Bank of Italy
Roberto Sabbatini: Bank of Italy
Raffaele Tartaglia Polcini: Bank of Italy

No 289, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Following the two surveys carried out in 2007 and 2009 on firms� price and wage setting practices, in June 2013 the ESCB�s Wage Dynamics Network (WDN) conducted a third survey aimed at assessing, through a harmonised questionnaire, the most important transformations under way in the national labour markets. This paper documents the results of the survey carried out in Italy. The sovereign debt crisis severely hit the Italian economy, causing a collapse in demand, increased uncertainty and difficulties in accessing external finance. Firms responded by decreasing labour input (adjusting both the intensive and the extensive margins) more often than wages. However, wage-setting practices were also affected by the new economic landscape: the percentage of workers employed in firms enacting wage freezes or cuts has steadily increased since 2010, reaching 17% of the total workforce in the sectors considered in 2013. Furthermore, a large share of companies have adapted their pricing strategy to the new economic environment; the frequency of price adjustments has increased, mainly as a reaction to stronger competition.

Keywords: labour cost adjustment; pricing strategies (search for similar items in EconPapers)
JEL-codes: E31 J23 J30 J31 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-eec and nep-mac
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