Report
Patrick Artus

Can the lowest wages be increased in euro-zone countries?

The governments in France and Italy want to increase the lowest wages, but by using government transfer payments, not by using wage increases paid by companies; in Spain, the minimum wage will be increased by 22%. We therefore ask the following question: is it possible to increase the lowest wages (in Germany, France, Spain and Italy) without a very negative impact on employment? We are clearly talking about increasing wages, not about government transfer payments to employees. To try to answer this question, since the lowest wages are found in "domestic" services (retailing, leisure, transport, household services), we compare nominal per capita value added in domestic services and nominal per capita wage s in the same services. The idea is that if per capita wages are close to per capita value added, the cost in terms of employment of an increase in wage s ( and therefore in low wages) will be very significant , which should discourage governments from carry ing out such an increase . We see that per capita wages are close to per capita value added in domestic services in France and Germany, and much lower in Spain and Italy.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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