Monday 11 July 2011

Wage productivity gap again

I didn't show the figure below in my earlier post, because I really don't know how to import it and make it readable. But I believe it illustrates quite well the main ideas, so I do it now:
1. Wage-productivity gaps are observed in building construction and agriculture: reality or fiction (decreasing informality...)?
2- In any case, for manufactures, services and the economy as a whole (total), deviations are not significant
3 - Prices/ULC in services increased faster than in manufactures. The later are linked to PPP. The increase in the former explains the RER appreciation: once again, Pn/Pt is the issue , not wage productivity gaps.
To this, I could add a figure showing that on average wages in services are higher than in manufactures.
Thus, the challenge is to convince workers (and unemployed) to accept a lower pay while moving from services to manufactures.
The macroeconomic addjustment will be impaired not only by the economic climate, which is not investment-friendly, but also by any incentives unemployed may have to wait and see, rather than to accept an immediate move to a less friendly production environment.


  1. Is there a connection there to the price paid having lots of people having "higher education" (meaning "diplomas" in areas with big imbalance between available workforce/available positions?).

  2. Please forgive this off topic post, but I think it is important for people of economic influence in Portugal such as those on this respectful blog watch the following 1 hour documentary with focus on Greece, but whose proposed solutions easily apply to Portugal. This is a repost from what I posted in the thread Could Bank Deposits be used to fund sovereign debt

    Please watch this 1 hour DOCUMENTARY: DEBTOCRACY

    Kind Regards,

  3. Besides the (lower) wage problem there will be a skills mismatches and adaptation problems , as well as geographical relocation issue.

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