Labour Productivity, Wages, and Inflation: Evidence from Selected Central and South-East European Countries

Abstract

The relationship between inflation, worker wages, and labour productivity growth has been a widely discussed topic among academics in recent decades. Labour productivity is a critical component for maintaining and improving the competitiveness of national economies and establishing sustainable economic growth. The increase in labour productivity serves as the foundation for increasing workers' wages, thereby enhancing their purchasing power and overall well-being. However, empirical data from Southeast European countries indicate that labour productivity growth rates have been insufficient to enable catch-up with their Western European counterparts. Additionally, these countries have experienced significant inflation rates in recent years, resulting in a notable decline in real wages for workers. Therefore, the gap between labour productivity and workers' wages has not only failed to diminish but has, in fact, widened over the past few decades. The primary objective of this paper is to examine the interrelationships among labour productivity, workers' wages, and inflation in Central and Southeast European countries, specifically the Balkan EU countries, Balkan non-EU countries, and the Visegrád group of countries. The findings reveal a short-term causality among inflation, labour productivity, and the statutory minimum wage in these three groups of countries. Furthermore, there is evidence of a bidirectional causal relationship running from the minimum wage and inflation to labour productivity, and vice versa, in the short term. Additionally, the introduction of a minimum wage shock significantly influences the future values of labour productivity and inflation. The adverse effects of an externally induced increase in the statutory minimum wage are particularly noticeable in Western Balkan non-EU countries.

Keywords: Transition economies, Labour productivity, Inflation

Emek Verimliliği, Ücretler ve Enflasyon: Orta ve Güney-Doğu Avrupa’dan Bazı Seçilmiş Ülkelerden Bulgular

Özet

Enflasyon, işçi ücretleri, ve emek verimliliğindeki artış arasındaki ilişki son on yıllarda akademik çevrelerde geniş ölçüde tartışılmıştır. Emek verimliliği, ulusal ekonomilerin rekabet güçlerini korumak hatta arttırmak için ve sürdürebilir bir ekonomik büyüme sağlamak için gereken en kritik bileşendir. Emek verimliliğindeki artış, işçi ücretlerindeki artışların temeli görevini görmektedir, böylece de emeğin satın alma gücünü arttırarak onların genel refah düzeylerini yükseltmektedir. Ancak, emek verimliliğindeki artış oranlarına ait ampirik veriler, Güney-Doğu Avrupa ülkelerinin muadilleri olan Batı Avrupa ülkelerine yetişmek konusunda yetersiz kaldığını göstermektedir. Buna ilaveten, bu ülkeler son yıllarda önemli derecede yüksek enflasyon tecrübe etmişlerdir, bu da işçilerin reel ücret seviyelerinde dikkat çekici bir azalmaya yol açmıştır. Dolayısıyla, emek verimliliği ve işçi ücretleri arasındaki fark azalmak yerine, aksine son birkaç on yılda artmıştır. Bu makalenin esas hedefi, emek verimliliği, işçi ücretleri ve enflasyon arasındaki karşılıklı ilişkileri, Orta ve Güney-Doğu Avrupa ülkeleri, özellikle Avrupa Birliğine dahil olan Balkan ülkeleri, Avrupa Birliğine dahil olmayan Balkan ülkeleri, ve Visegrád grubu ülkeler için incelemektir. Analiz bulguları, bu üç grup ülke için enflasyon, emek verimliliği ve resmi asgari ücret arasında bir kısa-dönem nedensellik ilişkisinin varlığını ortaya çıkarmıştır. Ayrıca, kısa-dönemde, asgari ücret ve enflasyondan gelerek emek verimliliğine doğru, ve tam tersi yönde olmak üzere, iki-taraflı bir nedensellik ilişkisine ait kanıt saptanmıştır. Bunlara ilaveten, bir asgari ücret uygulamaya başlanması şoku, emek verimliliği ve enflasyona ait gelecekteki seviyeleri önemli ölçüde etkilemektedir. Dışsal bir şekilde uygulanan bir resmi asgari ücret artışının olumsuz etkileri, özellikle Avrupa Birliğine dahil olmayan Balkan ülkelerinde göze çarpmaktadır.

Anahtar kelimeler: Geçiş ekonomileri, Emek verimliliği, Enflasyon

Prof. Dr. Trajko Slaveski (Ss. Cyril and Methodius University, Skopje, Macedonia)
0000-0003-0268-4760  slaveski@eccf.ukim.edu.mk

Ph.D. candidate Kristijan Kozheski (Ss. Cyril and Methodius University, Skopje, Macedonia)
0000-0002-8182-1219  kozeski@eccf.ukim.edu.mk

Submitted on: 2023-10-01 Accepted on: 2024-01-18

Year:2024 - Volume:3 Issue:1 Pages: 1-16

DOI: https://doi.org/10.36880/J03.1.0130

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APA style citation: Slaveski, T. , & Kozheski, K. (2024). Labour Productivity, Wages, and Inflation: Evidence from Selected Central and South-East European Countries. Journal of Eurasian Economies, 3(1), 1-16.

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