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News | Question of the Week, W C 30th July
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Question of the Week, WC 30th July

Q. What is going on with Italian wages? 

A. In our Monitors this year, we have been emphasising downside risks to the outlook for consumers’ spending in Italy due to sluggish real wage growth. A perceptive reader, however, has highlighted the recent gross wage report–for June 2018—which shows a significant jump in nominal wage growth to 2.0% year-over-year, from 1.0% in May. The first chart below shows that this is indeed a spectacular increase. So what is going on? 

We don’t have the series for the underlying sectors, but the google-translated version of the Italian press release sheds some light on what is going on. The next chart shows that wage growth in the public sector jumped significantly, due primarily to a bump in wages for military and law enforcement personnel. By contrast, wage growth in the private sector remains relatively subdued, also below the recent rise in headline inflation. That said, this is a welcome sign nonetheless 

 

Posted: 1st Aug 2018

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