Since then it is largely because China's unit labour costs have grown much faster than America's.
That is, that unit labour costs were too high and that they needed to come down.
The fall in unit labour costs over the past few years temporarily boosted profits.
But calculating that would require timely estimates of unit labour costs for all of China's trading partners.
Unit labour costs have fallen at an annualised 2% rate, the steepest cumulative decline since the 1950s.
Moreover, so long as productivity is rising, firms can cut unit labour costs even without pay cuts.
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The biggest threat for companies is that unit labour costs are growing faster than 5% a year.
As productivity rose wages did not, thus lowering unit labour costs over time.
Manufacturing accounts for about a fifth of eastern GDP, not far off western levels, and unit labour costs are lower.
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Italy and Spain have seen sharp rises in unit labour costs and their labour-productivity growth has stalled or gone into reverse.
All successful adjustments in Latin America involved huge initial devaluations and immediate reductions in real wages, thus cutting unit labour costs.
Meanwhile, productivity has surged by 5% over the past year, resulting in a sharp drop in unit labour costs (see chart).
Growth has been dismal over the past decade (Mr Berlusconi was an economic calamity) and unit labour costs have risen sharply.
Instead nominal wages would rise a bit, real wages only a little and unit labour costs would then fall to more internationally competitive levels.
Such pay rises as there have been are being eclipsed by rising productivity: unit labour costs actually fell in the second half of 1999.
According to Diana Choyleva, of Lombard Street Research, unit labour costs in US industry fell by 2% in 2009 and another 2.8% in 2010.
Between 2000 and 2008 unit labour costs declined by 1.4% a year in Germany while rising by nearly 1% a year in France and Britain.
The unit labour costs that is, the amount that had to be paid for labour relative to the value of the goods produced with it.
Within the euro, it has suffered a big loss of competitiveness as unit labour costs have shot up, largely because productivity has been stagnant or even fallen.
But short-time schemes are expensive: in the first quarter of 2009 unit labour costs in industry rose by about 25%, thanks to subsidies paid to idled workers.
There are no official statistics on China's unit labour costs.
It really is that Germany deliberately cut unit labour costs.
Economists at Commerzbank reckon that Irish unit labour costs, at the start of 2009, had risen about 23% faster than the Eurozone average since the start of the euro.
Italy has reduced unemployment, but rising unit labour costs are squeezing firms out of markets, a big cause both of slow economic growth and of demands for trade barriers.
Wages were thus deliberately repressed: there were some real wage cuts but the majority of that cut in unit labour costs came from the normal ongoing rise in productivity.
But if productivity growth suddenly increases, workers are initially happy with the previous pace of real wage gains, so unit labour costs decline, allowing both unemployment and inflation to fall.
Wages next door may be only a quarter of what they are in Austria, but he reckons his workers are worth the money, and his unit labour costs are still dropping.
Corporate profits, he noted, have risen sharply since the third quarter of last year, thanks in part to a big jump in productivity and to a decline in unit labour costs.
The combination of a 24% rise in the yuan against the dollar and a 21% increase in Chinese unit labour costs, relative to America's, explains the steep appreciation shown in the chart.
Unit labour costs fell by an annual average of 1.4% in 2000-08 in Germany, compared with a decline of 0.7% in America and rises of 0.8% and 0.9% in France and Britain respectively.
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