Euro zone: The power has shifted from companies to employees

In the recent period (since the start of 2018), the real wage has risen markedly faster than labour productivity in the euro zone. This is new: from 1998 to 2007 and then from 2009 to 2017, real wage s increased more slowly than labour productivity. This shows that in the last one and a half year, euro-zone employees have regained the bargaining power they had lost since the late 1990s thanks to the falling unemployment rate and the increasing hiring difficulties. Yet , inflation is not returning to the euro zone, which is explained by companies’ weak pricing power. So today , it is no longer employees' weak bargaining power but companies’ weak pricing power that explains the absence of inflation in the euro zone.