BoG: Wages can rise without boosting inflation

Wages could rise modestly without creating inflationary pressures, according to a study published in the Bank of Greece's Economic Bulletin.

The two authors of the study, which focuses on the tightness of labor markets post-pandemic, conclude that real wages lag actual productivity levels and, adjusted for inflation, remain lower than pre-pandemic levels.

Besides Greece, the authors also focused on the European Union and the United States. They found that the lag in wages relative to productivity exists in all three cases but, while real wages are below pre-Covid-19 pandemic levels in the EU and Greece, they are not in the US.

The study also found that massive government intervention to counter the effects of the pandemic and, later, the energy crisis, have decoupled unemployment levels from cyclical variations.