Brussels, Belgium (4E) – Euro-zone workers’ average wage growth fell to its lowest level in almost three years in the quarter ended June, and fell behind the rate of inflation, suggesting that households’ incomes have squeezed and undermines the prospects for a robust economic rebound.
Pay of workers in the euro zone jumped by 1.1 percent in the second quarter from the same period in 2012, according to European Union statistics agency Eurostat’s report released Monday. The figure is a significant slowdown compared with the 1.8 percent annual wage growth rate in the first quarter, and the slowest pace since the third quarter of 2010.
The result in the second quarter is an indication that wages are rising at a slower pace compared with the annual rate of consumer price inflation, eroding workers’ purchasing power. Data from the statistics agency also showed that the average price of consumer goods climbed 1.4 percent in the second quarter.
Eurostat’s latest inflation data, which was also released Monday, showed August consumer prices grew at a slower rate to 1.3 percent year-to- year, from 1.6 percent in July. The common currency bloc’s rate of inflation is still under the 2 percent target of the European Central Bank.
Monday’s data also showed that wages in Germany climbed 2 percent. While the figure eased compared with the previous quarters, it means that consumers in the euro area’s biggest economy are still reaping the benefits of having relatively higher real incomes. Wages saw a 0.1 percent decline in Portugal, 0.6 percent in Spain, and 4.6 percent in Cyprus in the second quarter from a year ago.