Nominal wages may increase, while real wages stagnate, owing to higher inflation.

Then a decade of nominal wage growth that out paced productivity gains led to a rise in unit labor costs, real exchange rate appreciation, and large current account deficits.

But wages have grown at a far slower pace than GDP.

Currently their nominal wages are only about 7 of the West European average.

Unit labor costs reflect compensation levels and productivity gains in productivity can offset the effect of wage growth.

Wage growth, rather than borrowing and financial booms, fuelled demand growth.

And if the decline in nominal wages signals that there is an excess supply of labor, matters only get worse.

For example, average nominal wages for women throughout the country are 2.4 fold higher than for rural women.

This disparity reflected some differences in productivity growth but even more so differences in wage growth.

Moreover, wage flexibility meant that substantially slower wage growth in the states that lost industries helped to attract and retain other industries.

But such adjustments cannot happen in a monetary union, so unit labor costs are slowly re converging via a protracted process of flat nominal wage growth and slowly declining real wages (a process that would be quicker with higher inflation in Germany and Northern Europe).

During this long process of industrialization, wages will increase gradually, but it is very unlikely that they will grow at the same rate as labor productivity.

In the face of downward nominal wage rigidity, higher inflation would facilitate sectoral adjustment and achieve a small but useful impact on reducing debt burdens.

Productivity growth at the historical rate of 0.7 in Germany, with wage growth of 4 , would be compatible with an inflation rate a little above 3 .

A rapid reduction in unit labor costs, through structural reforms that increased productivity growth in excess of wages, is just as unlikely.

After a decade that saw wages grow faster than productivity, unit labor costs (and the real exchange rate based on those costs) appreciated sharply.

Nevertheless, weak demand in EU will reduce the growth of exports while slower real wage growth will dampen private consumption.

The developing world is not doing much better. As the International Labor Organization s latest Global Wage Report shows, wage gains are lagging far behind productivity growth.

Muted wage growth increases competitiveness, and underutilized labor and capital are redeployed.

Yet, with high levels of unemployment likely to keep nominal wage growth relatively subdued, typical troubled households could be worse off with higher food and fuel prices cutting into disposable income.

So the conclusion seems to be that wage growth will not threaten China s competitiveness in the next 10 or even 20 years.

The alternative is muted wage and income growth shared across the income spectrum, combined with productivity enhancing measures.

Wages have stagnated despite strong productivity growth, while the trade deficit has set new records.

The American Employment Cost index and other indicators of developed country nominal wage growth show no acceleration of change.

Productivity growth has an impact on poverty because productivity drives wage increases, which help to improve the standard of living.

Indeed, productivity growth in India s service sector matches productivity growth in China s manufacturing sector, thereby reducing poverty by enabling wages to rise.

Fourth, private consumption growth in the last few quarters does not reflect growth in real wages (which are actually falling).

Lastly, the division and nominal value of the shares had not been specified.

(c) Wages

The more trade unions defend existing wage structures, and the lower productivity growth is, the longer the slump will be.

The notional pension capital accrues an interest like in the case of the funded pension scheme however, in contrast to the funded pension scheme where the growth of the capital depends on the return on the investment, the growth of the first tier capital depends on the wage growth in the country.

One explanation for the difference is accelerating wage growth across developing regions, which is raising commodity demand, whereas stagnating wages in developed markets are causing the reserve price to decline.

Nor are the non poor faring particularly well, as wage growth has remained virtually flat for a very long time, even as corporate profits are booming.

The alternative is to cut the face value of Greece s debt.

The German solution to this conundrum keeping wage growth below that of productivity, thereby reducing unit labor costs took more than a decade to yield results.

Short of dropping out of the eurozone, the only real option available to Greece, Spain, and the others to boost competitiveness is to engineer a one time across the board reduction in nominal wages and prices for utilities and services.

Determination of wages.

Unemployment remained high, at 7.8 at the end of 2012, and there has been almost no real wage growth over the last few years.

The similarities are large trade deficits, manufacturing job loss, asset price inflation, rising debt to income ratios, and detachment of wages from productivity growth.

Average unemployment would then have to rise in order to keep workers demands for real wage increases at a level warranted by productivity growth.

This structure contrasts with the pre 1980 business cycle, which rested on wage growth tied to productivity growth and full employment.

Movements in minimum wages

Evidence that China s wage efficiency remains high relative to other developing countries comes in the form of continued growth in inflows of foreign direct investment over the past 12 months, despite wage increases. In July, for example, FDI increased by 29.2 year on year, much higher than the global average.

Prepayments involve paying off at par the outstanding stock of debt.

The Parties may note that the nominal budget increase of 5 per cent from the 2002 2003 budget to the 2005 budget translated into a significant decrease in the amount of available resources, mainly due to the impact of the depreciation of Usthe United States dollar against the Euro This resulted in severe financial limitations that affect the work of the secretariat.