Monday 9 July 2012

An update on wage adjustment

I am still looking for the quarterly time-series but I have managed to find data on General Government employment for 2010 and 2011. This was useful to compute the average compensation inflation (click to enlarge the graph) in the public (blue line) and private sectors (green line). So far the adjustment for the total economy (red line) came in large part from the public sector.


  1. Kind of turns the whole "insiders vs outsiders" discourse on its had doesn't it?

  2. @ Michael

    Not really. What it shows is that downward nominal rigidity in the private sector is there. The decline in the public sector wages is essentially due to the cut of the 13th and 14th months (together with the average 5% decrease of the wage bill by the previous government). So far average wages have decreased through administrative actions and not market based adjustments. Let us wait for the first quarter 2012.

  3. Francesco, the cut of the 13th and 14th months (better called 1/7th of the yearly salary) aren’t present in the graph, since they are measures for 2012, and the graph only goes to 2011... So the drop in 2012 will only be depicted with data from 2012. The drop shown for 2011 should be the cut of 1/28th of the yearly salary (which affected both public and private workers).

  4. Have you performed the calculation also subtracting the price inflation index (to see the real increase/decrease of salaries agaist cost of living)?

    Also, since the variations are not additive, but multiplicative, what would be really the end result of those variations on the final salary?

    I assume what I am really asking for is the dataset :).

  5. @iv

    yes we have to wait for 2012 data. But regarding 2011: in my payroll, part of the subsidy of Christmas was not paid (the private had a tax right? and that should not affect compensation) and the 5% decrease in wage bill (2011) affected only the public servants.

    for the data no problem send me an email:

  6. Francesco was right. The 2011 data reflects to the 2012 data. We can understand the graph better with the help of a financial advisor like Ed Butowsky :)