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Euro zone labour costs accelerate in Q4
March 19, 2014 / 10:16 AM / 4 years ago

Euro zone labour costs accelerate in Q4

BRUSSELS, March 19 (Reuters) - Euro zone labour cost growth accelerated for the first time in nine months in the last quarter of 2013, data showed on Wednesday, in a sign the economic recovery might be affecting wages despite persistently high unemployment.

Nominal hourly labour costs in the 17 countries which shared the euro from October to December rose 1.4 percent compared with the same period of 2012, after a 1.1 percent rise in the previous quarter, the EU’s statistics office Eurostat said.

Eurostat data showed that euro zone wages and salaries grew 1.9 percent on the year in the fourth quarter, after a 1.3 percent rise in the third quarter, while the non-wage component remained stable.

Labour costs in Ireland, which has endured years of painful cost adjustment to make its economy more competitive, rose too, but at a slower pace than the euro zone average.

In Portugal, also undergoing adjustment to become more competitive, labor costs actually fell, mainly thanks to a sharp fall in the non-wage component like social security contributions and taxes on labour paid by the employer.

The same reduction in the non-wage component kept French labour cost growth at a fraction of the euro zone average.

Cyprus, which is struggling to re-start its economy after the collapse of its oversized financial sector, saw the biggest decline in labour costs of 6.5 percent year-on-year.

Labour costs in Italy, where the new government pledged to introduce wide-reaching structural market reforms and meet set deficit targets, rose 1.6 percent on the year in the fourth quarter after a 0.9 percent rise in the previous period.

The rise in the bloc’s nominal labour costs in the fourth quarter was led by a 1.7 percent rise, year-on-year, in industry, followed by a 0.9 percent increase in services and 0.3 percent growth in construction.

Inflation in the 9.5 trillion euro economy fell in February to 0.7 percent year-on-year, matching its four-year low seen in October, a level which triggered a surprise rate cut by the European Central Bank in November.

The ECB expects inflation to stay below its official target of close but below 2 percent until at least 2016, based on the bank’s latest forecasts published earlier this month.

Unemployment in the euro zone remains close to record highs at 12 percent of the workforce. (Reporting by Martin Santa)

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