We are not addressing the high valued added skill gap in the US. So, we are not providing high wage, high productivity, high valued added jobs, especially in the engineering and IT industries.
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Structural reforms were delayed, while wage growth relative to productivity growth diverged.
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Italy, unable to reform, has made a virtue of a low-wage, low-productivity economy, with little social mobility, a choice given respectability by the preaching of a complacently anti-capitalist Church.
The original postwar Social Compact was sustained by a combination of economic growth, union bargaining power, government policies and enforcement, and organizational practices that reinforced wage norms based on productivity.
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In the long run, real wage increases are determined by productivity growth.
Over the last 30 years, wage growth has lagged behind productivity across the industrialized world, leading to a steep fall in wages, salaries and other employee benefits as a proportion of G.
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For example, research has shown that, even in the US, many firms would prefer to reduce wage costs by eliminating some staff rather than affect morale and productivity by introducing across-the-board wage cuts.
Fast productivity growth in export industries raises average wage costs across the economy, including in non-traded services where productivity is sluggish.
Such measures should raise productivity growth, but wage restraint will still be needed to restore competitiveness.
Trade unions have helped recently by accepting wage rises below the growth in productivity.
While wage growth should be fueled by productivity, productivity data in Brazil show that it is actually falling.
Some analysts say that the wage increases will sharply outpace any productivity gains.
France's wage growth has kept up with productivity and inflation.
What really matters for jobs and competitiveness is not consumer price inflation, but the rate of change of unit labor costs. (Unit labor costs are wage rates adjusted for changes in productivity.) A recent study from the Boston Consulting Group suggests that Chinese unit labor costs will grow at about 8.5 percent per year over the next five years.
China still has cheap labor in its interior, away from its developed coastal cities, and productivity gains could mitigate higher wage costs.
Falling productivity pushes up unit-wage costs, hurting profits and cashflow.
Yet the general wage level is set not by specific sectoral productivity but by general productivity across the economy.
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As in Henry Ford's day, it is workers' productivity that drives long-term wage gains, not workers' wages that drive growth.
Part of this rise in pay has been offset by strong productivity growth, but even unit wage costs are rising more rapidly.
This is another thing not explained well in the campaign that taxes on capital reduce the potential capital to labor ratio, limit labor productivity gains, and thus limit wage gains.
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Meanwhile, U.S. unit labor costs in manufacturing, where the head-to-head competition for jobs lies, have been on a steady downward trend, because productivity growth has been strong and wage increases moderate.
On the other hand, thanks to low wage increases and a pick-up in productivity growth this year, profits in the euro area are now rising at their fastest pace for a decade.
This can be a hard pill for neoclassical economists and those who think like them to swallow, but it helps if you think of the minimum wage as it really is: a minimum productivity law.
Workers who retain their jobs will be higher productivity workers not low-wage workers in low- income families.
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This pressure creates an inexorable economic problem: Wage increases consistently outpace inflation with no increase in productivity.
The country's powerful trade unions are fighting wage cuts, so firms are trying to boost productivity or expand production abroad.
Mr Greenspan is placing a lot of weight on the recent increase in America's productivity growth, which has helped offset faster wage growth, and may well have raised the economy's long-term growth rate.
On inflation, the Fed chairman said that while high energy prices continue to be a source of risk, ongoing productivity gains in the labor market should keep wage increases--still the biggest driver of overall inflation--under control.
Labor shortage is good news for consumer incomes (at least for those consumers whose labor warrants the higher wages) but only if consumer spending rises at the same or faster pace than consumer incomes, and productivity growth is the same as or exceeds wage growth.
If labor and other markets are allowed to function without government intervention, there will be a tendency toward market-clearing prices, including relative wage rates and interest rates that reflect time preferences and the productivity of capital.
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