Monday October 2, 2017
Unemployment in the world’s biggest developed economies has been falling, at least since the end of the financial crisis. But wages, in the main, have not reacted as might be expected.
They have generally either grown only modestly, or even fallen.
Take, for example, resurgent Germany. Since 2012, the unemployment rate has tumbled to the lowest level since reunification. Wages and salaries have grown -- but only gradually and at nothing like a rate to imply pressure.
It is even clearer in Japan, where unemployment this year has fallen to a more than 20-year low of just 2.8 percent
“Everything tells us the labor market is tight in Japan,” said Mark Williams, chief Asia economist at Capital Economics. “(But) the one place we are not seeing labor market tightness in is wages, which aren’t rising at all.”
One impact of this globally is that inflation has not picked up much despite the massive amount of stimulus hurled at it by central banks, including negligible or even negative interest rates. Indeed, it may be one reason why some banks appear to be less worried about low inflation than they were.