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 Verimlili?i, Ücretler ve Enflasyon: Orta ve Güney-Do?u Avrupa’dan Baz? Seçilmi? Ülkelerden Bulgular

Özet

Enflasyon, i?çi ücretleri, ve emek verimlili?indeki art?? aras?ndaki ili?ki son on y?llarda akademik çevrelerde geni? ölçüde tart???lm??t?r. Emek verimlili?i, ulusal ekonomilerin rekabet güçlerini korumak hatta artt?rmak için ve sürdürebilir bir ekonomik büyüme sa?lamak için gereken en kritik bile?endir. Emek verimlili?indeki art??, i?çi ücretlerindeki art??lar?n temeli görevini görmektedir, böylece de eme?in sat?n alma gücünü artt?rarak onlar?n genel refah düzeylerini yükseltmektedir. Ancak, emek verimlili?indeki art?? oranlar?na ait ampirik veriler, Güney-Do?u Avrupa ülkelerinin muadilleri olan Bat? Avrupa ülkelerine yeti?mek konusunda yetersiz kald???n? göstermektedir. Buna ilaveten, bu ülkeler son y?llarda önemli derecede yüksek enflasyon tecrübe etmi?lerdir, bu da i?çilerin reel ücret seviyelerinde dikkat çekici bir azalmaya yol açm??t?r. Dolay?s?yla, emek verimlili?i ve i?çi ücretleri aras?ndaki fark azalmak yerine, aksine son birkaç on y?lda artm??t?r. Bu makalenin esas hedefi, emek verimlili?i, i?çi ücretleri ve enflasyon aras?ndaki kar??l?kl? ili?kileri, Orta ve Güney-Do?u Avrupa ülkeleri, özellikle Avrupa Birli?ine dahil olan Balkan ülkeleri, Avrupa Birli?ine dahil olmayan Balkan ülkeleri, ve Visegrád grubu ülkeler için incelemektir. Analiz bulgular?, bu üç grup ülke için enflasyon, emek verimlili?i ve resmi asgari ücret aras?nda bir k?sa-dönem nedensellik ili?kisinin varl???n? ortaya ç?karm??t?r. Ayr?ca, k?sa-dönemde, asgari ücret ve enflasyondan gelerek emek verimlili?ine do?ru, ve tam tersi yönde olmak üzere, iki-tarafl? bir nedensellik ili?kisine ait kan?t saptanm??t?r. Bunlara ilaveten, bir asgari ücret uygulamaya ba?lanmas? ?oku, emek verimlili?i ve enflasyona ait gelecekteki seviyeleri önemli ölçüde etkilemektedir. D??sal bir ?ekilde uygulanan bir resmi asgari ücret art???n?n olumsuz etkileri, özellikle Avrupa Birli?ine dahil olmayan Balkan ülkelerinde göze çarpmaktad?r.

Anahtar kelimeler: Geçi? ekonomileri, Emek verimlili?i, 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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