Increasing pay threatens EU recession

Annual earnings in the European Union are rising by almost 1
per cent more than can be justified by changes in productivity,  according to a report by the Federation of
European Employers.

Non-wage labour costs have fuelled inflation in the
Netherlands and Germany but have helped curb the overall rise in labour costs
in other EU countries. In Italy, for example, non-wage labour costs declined by
2 per cent over the year.

Unless employers try to contain earnings during the first
half of 2001, the EU economy will overheat and this could spark a recession,
claims the report.

By Mike Broad


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