ECONOMY

Wage parity with rest of EU a utopia

The average wage of 750 million Chinese workers equals 10 percent of Americans’. The average wage of 360 million Indian workers is half of that in China. In the eurozone it is at two-thirds of the USA. And the Greek average wage stands at two-thirds of the eurozone’s. Such glaring differences are intensifying wage competition in the globalization era. The average share of worker remuneration in the economies of the USA, Europe and Japan has fallen to 54.4 percent of their respective economies – the lowest rate since 1991, when the compilation of the statistical series began. As negotiations between Greek employers and unions over a collective national pay pact gather pace, unions’ demand for immediate wage parity with the rest of the eurozone seems more utopian than ever. Worse still, the number of years needed to approach that average is increasing rather than falling. Oddly, Greeks’ wealth is generally doing well, although not everyone’s, of course. Obviously, those who are doing best tend to be self-employed in professions not threatened by globalization and the increasingly competitive retail sector, and generally those who have managed to adapt to the fast changes. Public servants are not as successful but are still secure. This leaves all the others, the majority, notably farmers and low-paid workers in the private sector who usually find their pockets empty by the 20th of every month. Thanks to still-strong family ties, a large proportion of people make ends meet by drawing on parental resources; the rest tend to be hard-pressed. It would have been fortunate if we had realized that we are part of the global redistribution of labor. The loss of competitiveness of our products (this much we do realize) has a direct impact on incomes and the availability of employment opportunities. And it’s not at all pleasant. There are three ways of increasing our incomes or, at least, limiting their decline. The first is an improvement in skills. The second is for firms to improve their performance and create more jobs. And the third is cuts in taxes and other deductions that limit net income. Obviously, we would have to try a combination of all three. The first way requires better education and much better organization of resources. The worker becomes more collective-minded and, with the help of technology, is able to cover a wider range of specializations. The second way of improving incomes needs speedier deregulation, abolition of barriers to entry and – especially important – expansion abroad. For the third condition to happen, we would need to drastically reduce the public deficit, which can only be realized through a strong dose of taxation on Greeks’ accumulated wealth. The problem for Greek workers is not just unemployment. It is the comparative shrinking of a lifetime’s income. American workers, who comprise the most flexible labor market in a developed country, are already feeling the pressure on their incomes. In Germany, the rate of part-time employment has risen to 39 percent from 29 percent 10 years ago. Japan is steadily doing away with its traditional model of through-life employment. In the eurozone, salaries rose just 1.5 percent in 2005, against an average of 2.4 percent in the 2001-04 period. Is it perhaps time to see how we can increase employment before fewer jobs are accompanied by lower incomes?