Wage growth
economic measure
Wage growth is a trend of increases in wages, in contrast to wage stagnation. Real wage growth is an increase in wages adjusted for inflation, while nominal wage growth is not adjusted. It is often expressed as an annual percentage increase. In macroeconomics, wage growth is one of the main measures of long-term economic growth, since it reflects the consumer's purchasing power in the economy as well as the level of living standards. Positive wage growth (in nominal terms, i.e. unadjusted) is often accompanied by price inflation, while low wage growth may be accompanied by deflation, which government may seek to address through fiscal policy. Minimum wages may be introduced; these will usually increase average wage growth, at the cost of stimulating price inflation.
Weak productivity is likely to result in low long-term wage growth. In the shorter term, low wage growth may be caused by spare capacity in the Labour Market, which is likely to result in less competitiveness among the workers. To achieve consistent strong wage growth and sustainable economic growth, high productivity is needed.
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