TABLE T5-EUROPE: 1996-2011 REAL WAGE GAP RATES FOR EUROPEAN ECONOMIES, IN PURCHASING POWER PARITY (PPP) TERMS, FOR ALL EMPLOYED IN MANUFACTURING

Since 2010 the international comparison of hourly compensation costs (hourly wage rates) between the U.S. and selected developed and "emerging" markets refers to all employed in the manufacturing sector and no longer will be available for production workers only. Production-line wage rates are on average 20% below wage rates for all employed in manufacturing, including production workers, for the 1996-2009 period, for all countries included in the assessment. For further reference see wage-gap assessment of trends and differences between production-line and all employed in manufacturing in compensation cost terms here: <http:www.jussemper.org/Resources/Labour%20Resources/Resources/PLWvsAEM_wage_rates96-09.pdf>

In 2011 most European economies experienced no change or they lost some ground against the wage rates of their U.S. counterparts. Only eight of twenty-one European countries were able to improve their equalisation indices vis-à-vis equivalent U.S. workers, and ten of twelve euro-area countries recorded no improvement or an actual widening of their living-wage gaps. Of the thirteen European economies that recorded no improvement in their Equalisation Index (Eq-Idx), seven recorded no change from 2010, four recorded a slight drop and two, Greece and the UK, recorded a sharp drop. In 2011 all countries recorded appreciation of their currencies; the euro increased by 5,1%. All but Greece and Ireland recorded an increase of their nominal wage rates in local currency, and of these only the Netherlands did not increase their local wage rates above the 2,07% increase of U.S. rates.

• Of the eight countries that increased their Eq-Idx in 2011, six (Austria, Czech Republic, Denmark, Germany, Hungary and Italy) registered only a slight improvement of 1 or 2 index points. Only Norway and Switzerland recorded higher increases, yet nothing outstanding. Moreover, barring Switzerland and Hungary most of the increases of their Eq-Idx were due to a combination of high local wage rates and local currency appreciation. Switzerland's Eq-Idx growth was due to a rather high currency appreciation of almost 18%, which offset the rather bleak increase of only 0,4% of its nominal wage rate in local currency. Hungary, in contrast, improved its equalisation due to recording the highest local nominal wage rate increase of all 21 countries in this assessment (5,7%), which is almost three times the increase of the U.S. wage rate.

• Among the thirteen countries with no improvement (Belgium, Estonia, France, Poland, Portugal, Slovakia, and Sweden) or that had an actual backtrack from their 2010 position (Finland, Ireland, Netherlands, Spain, Greece and the UK), eight (Belgium, Estonia, France, Slovakia, Finland, Netherlands, Spain and the UK) experienced PPP cost of living increases higher than both the increase of their local wage rates and their currency appreciations. Three (Portugal, Sweden and Ireland) recorded PPP rate increases lower than their currency appreciation rates but higher than their the local wage rate increases and two (Poland and Greece) had PPP increases above their currency appreciations. In fact, Greece and Ireland were the only economies in this assessment recording actual drops in 2011 of their local nominal wage rates, of -7,3% and 1% respectively.

• In retrospect, from 1996, despite the meagre improvement since the beginning of the global crises, seventeen economies are still ahead of their 1996 Eq-Idx position; two continue the same (France and the UK), Austria is onepoint behind and Greece is clearly behind its 1996 Eq-Idx. Moreover, of the seventeen that are better off, ten (Estonia, Poland, Slovakia, Sweden, Finland, Ireland, Czech Republic, Denmark, Hungary, and Norway) are far or extraordinarily ahead of the 1996 position, whilst seven are clearly ahead and only France and the UK are in the same position as in 1996.

• Austria is one point behind its 1996 Eq-Idx but, except for 2004, it has always had an index above 100.Greece, in contrast, is clearly showing the effects of its deeply induced depression and is now three points behind its 1996 Eq-Idx position. In great contrast, Slovakia shows the greatest improvement of its Eq-Idx not only among European countries but of all 31 economies in the three regions covered by our assessments, ahead of South Korea and Argentina, the second and third best performers respectively, by more than doubling its Eq-Idx from a 22 index in 1996 to a 45 index in 2011.