Europe’s Workers See Living Costs Rise, but Pay Isn’t Keeping Pace

Europe’s unemployment rate has fallen below its pre-pandemic level, but a surge in wages this year doesn’t seem likely even though higher inflation has weakened workers’ spending power, according to economists and officials, the Wall Street Journal reported. At 7.3%, the eurozone’s unemployment rate was below pre-pandemic levels in October, having hit a pandemic high of 8.6% in September 2020. The relatively small size of those swings, economists say, is largely because of furlough programs, in which governments essentially paid businesses to keep idled workers on as employees during the pandemic, rather than letting them go, by covering a large share of their wages. At their peak, those programs supported tens of millions of workers across the currency area, but have since shrunk significantly. Because so many workers were still employed but didn’t work as much, economists see the number of hours worked as a better guide to the amount of slack in the eurozone’s jobs market as the economy has adjusted to successive waves of Covid-19 infections. And those figures show that eurozone workers in the three months through September were still putting in 2% fewer hours than they did in the final three months of 2019. For many economists, that suggests businesses should be able to raise output without having to pay sharply higher wages to attract workers. Read more.