Transcript Slide 1

Macroeconomic trends in Europe with view to
collective bargaining
EMF CB Committe summer school
Portugal 13-15 September 2010
Béla Galgóczi
Based on the macroeconomic chapter of the Eucoban report
prepared by Vera Glassner and Bela Galgoczi
[email protected]
[email protected]
Structure of presentation
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Basic facts and prognoses on the fragile
upturn in Europe
Is the crisis over now?
Labour market situation still depressed
The performance of the relevant
manufacturing sub-sectors (output, orders,
employment, productivity)
Productivity, inflation and wages - what does
this mean for collective bargaining in the
sector
Conclusions
The new danger: austerity
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The debt crisis in the Eurozone has pushed
governments in a number of high-debt and/or
high deficit countries,
● such as Ireland, Italy, Greece, Portugal and
Spain, to apply draconian austerity measures.
● Under pressure from the financial markets
countries with low debt ratios, such as
Germany and France, have also adopted
consolidation programs.
● This abrupt farewell to stimulus packages and
the expansionary fiscal policy threatens to
sweep away the hesitant and fragile recovery
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in Europe.
Europe in 2010 – a divided picture
●
GDP is expected to grow (annual average) by 1.0 per cent
in the EU-27 and by 0.9 per cent in the Eurozone in 2010
● Signs of recovery took greater momentum in Germany in
the second quarter of 2010.
● 3.7 per cent year-on-year increase of GDP in the second
quarter of 2010
● helped the Eurozone upwards with year-on-year GDP
growth of 1.7 per cent (instead of the forecast 1.4 per
cent)
● The current upswing was driven by a surge in German
exports that were mostly boosted by the weak euro in the
first half of 2010.
● This upswing seems to be over now…
4
Gross domestic product in 2009 and
prognosis for 2010 (annual growth)
2009
annual change in %
5
2010*
-10
-15
-20
Data Source: European Commission (2009).
5
CY
PL
MT
FR
EL
PT
BE
LU
ES
AT
NL
EA
EU
SK
CZ
UK
SE
DK
DE
IT
BG
HU
RO
IE
FI
EE
SI
LT
-5
LV
0
Unemployment rate, 2009-2010
Jan. 2009
Jan. 2010
in %
25
20
15
10
5
6
LV
ES
EE
LT
IE
SK
HU
PT
FR
EA
EL
EU
SE
FI
PL
IT
CZ
BG
BE
UK
DE
DK
RO
MT
SI
CY
LU
AT
NL
NO
0
Labour market prospects
By early 2010 unemployment has further grown in all EU
countries, by summer 2010 only signs of stabilisation
in a number of countries although on a very high level
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High unemployment will remain a huge problem in the
mid-term even if output starts to grow
● It is a further danger that output growth is based on
productivity growth and not on employment growth
● We should not forget that manufacturing output fell by
19% in the first Q of 2009, employment fell by 6%
● In automobile industry output down by 40% in Q1,
employment by 7.5%
● It will take a long time to restore pre-crisis
employment
7
Industrial output – spring 2010
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Industrial output of the EU-27 showed a clear
upswing by over 10% by Spring 2010
● This was however only enough to bring
industrial output back to the level of 2001
● The scar of the economic crisis remains there
● Slide 10 shows the upswing by product
groups, intermediate goods (like steel, car
parts, chemicals) taking the lead by over 10%
year-on-year increase
8
Industrial output: with the upswing back in 2001
Data Source: European Commission (2009).
9
Industry upswing by product groups
15
June-09
10
sept-09
Dec-09
March-10
5
0
-5
-10
-15
-20
-25
10
Total
industry
Intermediate
goods
Energy
Capital
goods
Durable
consumer
goods
Non-durable
consumer
goods
Productivity, inflation, wages
In the next slides we show major trends in productivity,
nominal wages and inflation based on the
Commissions Ameco data basis
The first graph shows long-term productivity trends,
where the industry and manufacturing have built up a
huge productivity advantage compared to the whole
economy
During the crisis some of this `productivity reserve`
disappeared, but the advantage remained
Slides 13-14-15 show trends on whole economy level,
as this is what counts at wage negotiations
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Longer term trend of productivity (before crisis)
annual change
(%)
LP Total Economy
LP Total Industry
7
LP Total Manufacturing
6
5
4
3
2
1
0
2000
12
2001
2002
2003
2004
2005
2006
2007
Development of productivity, 2009-2010
6
2009
2010
4
2
0
-4
-6
-8
-10
13
LT
RO
SI
LV
DE
FI
EE
LU
UK
NL
CZ
SE
HU
AT
BE
IT
SK
EU
BG
EA
MT
DK
NO
CY
FR
EL
PT
IE
PL
ES
-2
7
6
-1
-2
-3
-4
14
IE
PT
ES
BE
LU
FR
CY
EE
DE
EA
AT
CZ
IT
SI
SK
EU
NL
DK
EL
FI
MT
SE
UK
NO
BG
LV
PL
HU
LT
RO
Inflation by country, 2009-2010
2009
2010
5
4
3
2
1
0
Development of nominal wages, 2009-2010
annual change (%)
10
2009
2010
5
LV
LT
EE
IE
EU
CZ
HU
DE
MT
UK
SE
LU
FR
EA
BE
IT
NL
FI
AT
SI
RO
NO
ES
PL
DK
PT
SK
CY
EL
BG
0
-5
-10
-15
15
Real wage developments, 2009, 2010
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2009: EU-27 average increased by 0.55%
● + 0.88 per cent in the Euro area
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Germany saw a decrease by 1.5 per cent.
The situation was worst in Latvia and Lithuania, where real wages
declined by 11 and 5 per cent,
in 2009, Bulgaria, Greece had the highest increases, by 4%
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In 2010 real wages to grow by 0.37% in the EU27 and by 0.61% in the Eurozone.
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Greece: a real wage drop by 3.6% and further CEE
countries + UK and Ireland is also likely to have a
decrease
Spain and Germany: slightly increase (by 0.5 and 0.8
per cent).
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16
Wage formula in 2009 and 2010
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In 2009 the wage formula was `over-performed` by 2.9%
in the Eurozone: 2 % drop in productivity and 0.9%
increase of real wage
Not so in the EU-27 level, where in 2009 both
productivity and real wages decreased by 2%
For 2010 for the Euro area expects a lower real wage
increase (1.5 per cent) than that of productivity (almost
2%).
For the EU-27, again under-performing by 1.6%, with a
productivity increase of 2 per cent and a real wage
increase of 0.4 per cent.
Eurozone (without Germany) rather balanced, Germany
and non-Eurozone MS under pressure
Conclusions on the bargaining climate
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Even if the vague signs of an upturn get manifested in
the rest of the year, auterity packages pose a huge
threat
Labour market is further on under stress
2009 was only an exception that the wage formula was
fulfilled (but only in the Eurozone without Germany)
CB climate further on very difficult, especially because
of the austerity obsession
Wage increases would be a precondition for recovery
and the interest of all players as consumer demand is
key in overcoming the crisis!
GERMANY should take the lead (in wage increases)