The US government is talking up wage growth – when will Europe follow?
This is the (updated) translation of an article that was issued January 15, 2015 on flassbeck-economics. We intend to publish one article in English every week to allow more readers to follow closely our analysis of global and European events.
In the recent past, we have repeatedly pointed out that it is essential for governments to intervene in wage setting processes. This is absolutely necessary given the rise in unemployment in the wake of the financial crisis and the skewed relations of power that characterise de-regulated labour markets.
Back in February 2013 we firstly raised the need to drop the simple supply-demand apparatus for labour market analysis in the case of Japan. Meanwhile the Japanese government realized the need to intervene and tried to convince employers that higher wages are of national interest. Now even the US government has spoken out in favour of intervention on the labour market. Last week, the US State Secretary of Labor Thomas E. Perez said that ‚We need to do more to achieve meaningful wage growth, because too many middle-class families are still working harder and falling further behind. We need to do more to ensure that the economy works for everyone, [...]