Policies for wage-led growth in Europe

Policy Brief

The European Commission (EC) has long encouraged wage moderation for many years, and it has explicitly recommended real wage growth below productivity growth to increase the international competitiveness of the EU. This policy has resulted in three decades of increasing inequality, declining share of wages in national income, and the emergence of a new class of super rich without generating a sustainable growth model for Europe. Full employment has not been achieved in any of the EU countries, even before the crisis. This paper summarizes the findings of two recent reports by and derives the policy implications.

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