Although there has been much talk about the decline in real pay levels that resulted from the post-2007 economic decline, workers across the Eurozone have actually fared better—relative to their companies’ fortunes—following the downturn rather than during the period leading up to it. The sustaining of employee salaries through the recession has also hit company profitability and the level of re-investment in fixed capital.
The Federation of European Employers reports that, according to the latest figures published by European Commission's statistical agency Eurostat, in the first quarter of 2002 total employee remuneration in the Eurozone stood at 60.4% of gross value added. When the downswing came in 2008 it fell to 59.2%. However, as the recession took hold and company value added fell sharply through the autumn and winter of 2008/9 employee remuneration climbed to 62.1% of value added. Since then remuneration levels have sustained much of their recession gains to stand at 61.1% of value added in the first quarter of this year.
Commenting on these developments during an online debate from his base in the south of France, Robin Chater, Secretary-General, Federation of European Employers warned, "If there is to be a sustained recovery in the Eurozone, resources are going to have to be diverted away from employees back into long-term investments. Companies have sustained their positions by substituting labour for capital for far too long and that is exposing the European economy to increasingly capital intensive competitors in North America and the Far East".
Paul Arkwright
Publisher
