Want Higher Wages? Move to France (and Lose Your Job)
Three graphs to try to convince you why slow wage growth is a “good thing” for the UK, given the path of aggregate demand.
Graph one: the change in nominal gross value added since 2008. This is nominal GDP at basic prices not market prices, so factors out changes in indirect taxes such as VAT.
This is very similar for France and the UK.
Graph two: the change in nominal hourly wages since 2008.
The fact that nominal wages increased in both countries between 2008 and 2009 despite sharp falls in nominal demand is a good illustration that nominal wages are indeed sticky. But there is “sticky” and there is “gravity-defying”. French wages are up nearly 12% since 2008 despite a 7% rise in national income over this period.
What’s the result? The “hard-working families” of the UK are actually working hard (relatively speaking; not to deny there is slack in the labour market). In France, not so much.