LABOUR COSTS are rebalancing rapidly across the Eurozone, research from Société Générale revealed yesterday.
This means the Eurozone is going some way to accomplishing the internal devaluations necessary to keep peripheral countries competitive, Société Générale says.
Total hourly labour costs rose two per cent quarter on quarter in Eurozone powerhouse Germany, putting them up 2.6 per cent on the year, whereas the rest of the Eurozone saw costs grow only 1.4 per cent in the second quarter.
And looking at the past four years Greece has actually seen wage costs fall 0.7 per cent on average per year – from €16.50 (£13.25) an hour in 2008 to €16.00 an hour in 2012 – while German employers paid €2.60 more by the end of the period.
This fact was noted by Jean-Claude Juncker, Prime Minister of Luxembourg and chairman of the Eurogroup of finance ministers, who took it as evidence Greek reform was working, and it should stay part of the euro.
“It is not the case that the [Greek] programmes have been ineffective,” Juncker told Bavarian television. “[Grexit] would be disastrous for the Greeks...Europe as a whole would be weakened too,” he went on.
In line with the pay squeeze in the rest of the country, Greek central bank chief George Provopoulos decided to cut his own salary by 30 per cent, having already cut 20 per cent from his pay in December 2009.