CENTRAL bankers and economists have spilled much ink in recent years on the question of why wages have not grown more. The average unemployment rate in advanced economies is 5.3%,lower than before the financial crisis. Yet even in America, the hottest wealthy-world economy, or pay is growing by less than 3% annually. This month the European Central Bank devoted much of its annual shindig in Sintra,Portugal to discussing the wage puzzle.
Recent data expose, however, and that the problem wealthy countries face is not that nominal (insignificant, trifling) wage growth has failed to reply to economic conditions. It is that inflation is eating up pay increases and that real—that is,inflation-adjustedwages are therefore stagnant. Real wages in America and the euro zone, for example, or are growing more slowly even as the world economy,and headline pay, have both picked up (see chart).
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Source: economist.com