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Wage increases are obviously immensely popular and Unions in Germany are doing their best. While I wrote about stagnating wages, in fact for the last two years wages have been growing at a healthy rate. But I fear it is still to slow to save the Euro. If we are optimistic and project an ongoing wage growth of 4%, we will still need 5 years to get to the 20% increase you estimated.

I believe what will happen is that the Eurozone will dip back into recession and unemployment will start to rise even in Germany. And then it is clear what will be the political answer: wage cuts to increase competitiveness.

by rz on Fri Jun 6th, 2014 at 03:33:25 AM EST
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