Regional Disparities in the European Union: Focused on the Wages and Their Development

Size: px

Start display at page:

Download "Regional Disparities in the European Union: Focused on the Wages and Their Development"

Elwin Hubbard
6 years ago
Views:

1 Regioal Disparities i the Europea Uio: Focused o the Wages ad Their Developmet K. Gajdováad P. Tuleja Abstract Regioal ecoomy is evolved i each regio i differet ways. It meas that there are formed differeces. These differeces are called the regioal disparities. They are formed i may areas. Also, the wages i the regios are evolvig i differet ways. These are the disparities of the wages. The disparities of the wages are formed as betwee regios withi a coutry (atioal) ad as betwee coutries (iteratioal). Sometimes the wage is motivatio for the worker for movig to aother regio (or aother coutry). This article focuses o the differet wages i the coutries of the Europea Uio. The aim of this article is to capture the importat poits i the evolutio of the gross average mothly wages i the coutries of the Europea Uio ad to aalyse the differeces betwee coutries. Idex Terms Gross average mothly wage, omial wage, real wage, regioal disparities. I. INTRODUCTION Each coutry, each regio, wats to develop ad costatly improve their competitiveess. However, there are differeces i the developmet amog coutries (regios). These differeces may be called the regioal disparities. It is a cocept which is very frequet i the last decade. The regioal disparities are formed i differet areas. I this article, we discuss about the disparities of the wages. Because the wages are a very importat factor that affects everyoe. Recetly, more ad more people are willig to move to aother coutry for higher wage. Also, the wages of each coutry are evolvig i differet ways ad at differet paces. I this article there is the aalysis of wages i the Europea Uio. At first there are examied gross average mothly wages. These are wages, which are actually provided to employees. May people do ot realize that i the other coutry, there are higher wages (omial wages), but also the cost of livig is higher. It meas that real wages for them may be disadvatageous for chage the residece. The mai aim of this article is to capture the importat poits i the evolutio of the gross average mothly wage i the coutries of the Europea Uio ad to aalyse the differeces amog coutries. The other aim is to determie the causes of the treds, especially i times of crisis, which hit the coutries of the Europea Uio. Mauscript received Jauary 15, 2013; revised March 16, This research was fiacially supported by the Studet Grat Competitio SU withi the project SGS/7/2012 The ifluece of regioal disparities o the busiess eviromet. K. Gajdováad P. Tuleja are with the Departmet of Ecoomics, School of Busiess Admiistratio, Silesia Uiversity, Czech Republic ( gajdova@opf.slu.cz, tuleja@opf.slu.cz). At first, the article focuses maily o omial wages. It examies their developmet. It was assumed the omial wages will always rise. The research shows this is ot always true. Moreover i the article there are the basic calculatios for closer examiatio. There is calculated the average rate of growth of wages. There is a compariso betwee the rate of growth of omial wage ad the rate gross domestic product. Just the gross domestic product is a idicator to determie the performace of the ecoomy. The last part of this article is to compare the real wages ad labour productivity, specifically the compariso of the average growth of real wages ad the average growth of labour productivity. Prevet this trasfer of omial wages to real wages. May parts of the aalysis show some problems, which are maifested i the ecoomies of the coutries of the Europea Uio. The authors of this article wated to come out of the cocrete absolute values of gross average mothly wages. As well as, they wated based o publicly available sources. The authors explored the iteratioal statistical portals. The data, which were ot available o these portals, were traced o the atioal statistical offices of EU coutries. The aalysis of wages is a very iterestig area ad it is a large area. More research of the wages i the Europea Uio will be subject of further examiatio. It seems iterestig to look at the depedece of migratio o wages. It is precisely may authors stated this depedet. II. LITERATURE REVIEW Each coutry, each regio, wats to costatly develop ad improve their competitiveess. However, the developmet of idividual coutries i the Europea Uio is ot homogeeous. There are disparities amog coutries. They are i terms of ecoomic, social, ecological, cultural ad other characteristics. Oe of the most importat ecoomic idicators is the icome of the populatio (it is uderstood i the sese of earigs). It shows some qualitative ad quatitative characteristics of each society. It ca be moitored at the iteratioal level. Referece [1] the regioal disparities are pheomeo ad very frequet term last decade. Object of iterest ad research are complex of social objects ad ueve developmet of parts of these objects. The differetiatio ad the iequality of these parts are called as disparity. The term disparity comes from the Lati word disparatus, which literally meas split. Miistry of regioal developmet CZ defies the regioal disparities as ufouded regioal differeces i the ecoomic, social ad evirometal DOI: /JOEBM.2013.V

2 developmet of the regios [2]. The regioal disparities ca be reduced i specific ways. The basic factor i reducig of the regioal disparities withi the group (e.g. EU) may be the migratio. The eoclassical theories explai the migratio as a factor that balaces the regioal disparities. Some people are willig to move amog coutries for the visio of a better stadard of livig. Their decisio depeds o the higher probability of fidig a job ad gettig the higher wages. The most commo cause of migratio is a differet level of icomes (wages) amog regios (coutries). This differetial of icome is the corerstoe of eoclassical especially, but also the other theories of migratio. It is importat to ote for migrats is especially importat the real wage. But the omial wage ca be the cause for work i aother coutry [3]. At first the perso who is thikig of emigratig is probably lookig at the gross average wage, which is offered i aother coutry. The, of course, this perso looks at the costs of livig i the coutry. It meas that this perso will be iterested i the real wage. A. Defiitios of the Wages The omial wage is paid as a moetary reward for work performace defied by agreemet betwee the employer ad the employee. The real wage is a ecoomic term that refers about the actual value of earigs (wages). This reflects what ca be bought for a moetary reward. It expresses the purchasig power of wages. It is the ratio of the omial wages to prices of goods ad services (the purchasig power). The gross average mothly wage is the wage without other persoal costs. It is the share per employee of registered umber per moth. The wages iclude the basic wages ad the salaries, the bouses ad the additioal wage or salary, the other bouses, the compesatio for the wages ad the salaries, the remueratio for work readiess ad other parts of wages ad salaries, which were charged to be paid for the period. This wage is gross it meas it is before the reductio of the premium to the health isurace ad social security, advace icome tax persoal icome tax ad other statutory collisio. The icrease (the decrease) i the average omial wages expresses percetage icrease (decrease) the wage i a give period compared to the same period last year. g w ; w ; t w ; t1 100 (1) w t ; 1 The icrease (the decrease) i the average real wages expresses percetage icrease (decrease) i the idex of the average omial wages ad cosumer price idex for the same period. g w; r (2) III. COMPARISON OF THE WAGES IN THE EUROPEAN UNION The wages i the Europea Uio are developig i differet ways, at differet speeds ad directios. The omial wages ca be expected to have the costat growth. However, the aalysis of the omial wages i the coutries of the Europea Uio shows that it is ot always. Durig the aalysis of wages i the coutries of the Europea Uio, we first proceeded from the values of the omial wages. It is wages which employees actually receive. I the most coutries, employees receive the wage per moth. At first, we used the gross average mothly wage for compariso of idividual wage of coutries of the Europea Uio. For most coutries wages cover total ecoomy ad are expressed per full-time equivalet employee. This eables compariso of differet coutries irrespective of the legth of workig time ad the share of part-time ad full-time workers. The specific values of wages are take from the UNECE Statistical Divisio Database ad Natioal Statistical Offices [4]. All of the values are coverted to the same currecy, the U.S. dollar. Wages commo currecy (US$) estimates: are computed by the UNECE Secretariat usig the omial exchage rates. Table I shows the gross average mothly wages i the EU i the years (i this view it is possible to see oly the odd umbered years, but the aalysis is performed o the moitored period). It shows that the gross mothly wages are at the differet levels amog coutries. Moreover, it shows that the gross mothly wages for each year are evolvig differetly. However, all coutries have oe commo feature. Up to 2008 i all coutries, the gross average mothly wages icreased, but the came the chage, sice 2008 wages bega to declie. After it, betwee 2009 ad 2010 the gross average mothly wages bega to grow. All this was caused by the maifestatio of the ecoomic crisis. Sice 2008 the EU faces the ecoomic crisis. The primary cause was the U.S: mortgage crisis 2007 which gradually grew ito the global fiacial crisis i 2008, the i the years 2008 ad 2009 it affected the etire EU. This caused a icrease i the uemploymet rate i almost all states ad regios of EU, a decrease i the umber of job vacacies, as well as a decrease of wages. I some coutries this declie is more itese i some coutries the declie is less itese. The largest reductio i the gross average mothly wages was i Malta ad i Irelad. The gross average wage i Malta is i the rage of low values i compariso to other EU coutries. The declie i wages is very itese. It is maily for this reaso that Malta has oly small quatities of the raw materials ad the domestic market is very small. I recet years the developmet of the ecoomy is based o tourism, which costitutes 30% of GDP. The developmet of the ecoomy is also based o exports, which costitutes 75% of the total exports of the state. Malta exports maily semicoductors. Just these sectors are amog the sectors most affected by the crisis. Irelad had a similar problem. Irelad specializes i maufacturig ad service idustries. Also these are the sectors affected by the crisis. The cotrast, the smallest declie was i Bulgaria i this period. Bulgaria is a rapidly growig ad moderizig coutry, with sigificat amouts of foreig ivestmet comig i. The ecoomy has made impressive progress i 263

3 recet years by maitaiig log-term fiacial stability ad sustaiable growth i a umber of sectors. So far we have looked at the effects of the crisis. Whe we look at the whole moitored period, it meas the period from 2002 to The gross average mothly wages icreased i all coutries. This fidig has bee made so that 2002 is take as 100%. Betwee 2002 ad 2003, the largest icrease was i Slovakia. But from other years, the largest cumulated icrease was i Romaia (always compared to 2002). From 2002 to 2011 i Bulgaria the gross average mothly wages rose of 289% (it is from $162.5 i 2002 to $632 i 2011). However i this coutry there is quite high iflatio. It is the 7th highest iflatio i compariso with other EU coutries. O the other had, i the period from 2002 to 2011, the smallest cumulated icrease was i the Uited Kigdom. It was oly 39 % icrease. It is from $ i 2002 to $ i I the last reportig year, it is the year 2011 the employees receive the miimum gross mothly wages i Bulgaria ($470.5), i Romaia ($632) ad i Lithuaia ($818.9). O the cotrast the employees receive the maximum gross mothly wages i Luxembourg ($6102.6), i Demark ($6091.3) ad i Irelad ($5575.7). The gross average mothly wage i the EU27 is paid i amout of $ geometric average of aual growth rates. G 1 ( g w; 1, 2,..., ) 1, 2,..., i i1 Fig. 1 shows the well-arraged compariso of the average growth rates of idividual coutries i the Europea Uio. The data are sorted from the highest value to the lowest. This aalysis proves that the largest aual icrease i gross average wages is i Romaia (16.29%), followed by Bulgaria (15.73%), Estoia (14.20%), Latvia (13.53%). The smallest aual icrease is i the Uited Kigdom (3.73%), Germay (6.13%) ad Belgium (6.76%). I the whole Europea Uio there are wages icreasig year o year of 7.69%. (3) TABLE I: THE GROSS AVERAGE MONTHLY WAGES IN THE EU (US$, AT CURRENT EXCHANGE RATES) EU Austria Belgium Bulgaria Cyprus Czech Rep Demark Estoia Filad Frace Germay Greece Hugary Irelad Italy Latvia Lithuaia Luxembourg Malta Netherlads Polad Portugal Romaia Slovakia Sloveia Spai Swede Uited Kig For a more detailed view o the problem it has bee calculated aual chages i gross average mothly wages i the coutries of the Europea Uio. The chage i the average omial wages expresses the % chage i the wage i the moitored period compared to the same period last year. Subsequetly, it was calculated the average growth rate of gross wage. We measure the average rate of growth by the Fig. 1. The compariso of the average rate wage i the EU. Table II shows the compariso of the gross average mothly wages ad gross domestic product. Values are give i percetages. Wages are compared with gross domestic product, because it is a importat idicator for determiig of performace of ecoomy. The Gross domestic product is a key idicator of the developmet of the atioal ecoomy it measures the performace of the ecoomy. It is a idicator showig the ewly created value. It is used to estimate the ecoomic developmet of the coutry. The gross domestic product i the fiacial expressio represets the value of everythig what has bee ewly created i the coutry durig the reportig period. The largest differece betwee the growth of omial wages ad gross domestic product is i Romaia. I this coutry wages are risig much faster tha gross domestic product. It is alarmig. After Romaia the largest differece is also i Bulgaria ad Estoia. O the cotrary the smallest differece betwee the growth of the omial wages ad gross domestic product is i Slovakia, Luxembourg ad Polad. 264

4 I Slovakia there is a rate gross domestic product is higher tha the rate of wages. It is the oly coutry i the Europea Uio with followig results i this moitored period. TABLE II: THE COMPARISON OF GROSS AVERAGE MONTHLY WAGES AND GROSS DOMESTIC PRODUCT (IN %) wage GDP Differece EU Austria Belgium Bulgaria Cyprus Czech Rep Demark Estoia Filad Frace Germay Greece Hugary Irelad Italy Latvia Lithuaia Luxembourg Malta Netherlads Polad Portugal Romaia Slovakia Sloveia Spai Swede Uited Kig TABLE III: THE COMPARISON OF REAL WAGES AND LABOR PRODUCTIVITY (IN %) of growth of labor Differece real wages productivity EU Austria Belgium Bulgaria Cyprus Czech Rep Demark Estoia Filad Frace Germay Greece Hugary Irelad Italy Latvia Lithuaia Luxembourg Malta Netherlads Polad Portugal Romaia Slovakia Sloveia Spai Swede Uited Kig Util ow it was aalysed oly the gross average wage, which is paid directly to employees ad it is regarded as omial wage. The better explaatory power has the real wage. This is the omial wage reduced of the iflatio. It shows the purchasig power. The last aalysis, which is icluded i this article, is a compariso of real wages ad labour productivity. At first, the real wage idex was calculated (1), (2). The the average rate real wage was calculated (3). Table III shows a compariso of real wages ad labour productivity [5]. Values are give i percetage. It is evidet that wages grow faster tha labour productivity i all coutries of the Europea Uio [6]. If wages grow faster tha productivity, it meas that the costs of compaies grow faster ad prices rise. The largest differece betwee the rate real wages ad the rate labour productivity is i Cyprus, the Czech Republic ad Bulgaria. O the cotrary, the smallest differece betwee the rate of growth of real wages ad labour productivity is i the Uited Kigdom, Hugary ad Netherlads. IV. CONCLUSION I this article the gross average mothly wage i the coutries of the Europea Uio was aalysed. After theoretical isights o disparities i wages the aalysis itself. This is the basic aalysis, which will be followed by a more detailed aalysis. This aalysis will be focused more o the depedece of migratio o wages i the coutries of the Europea Uio. This will be the subject of the further research, because it is a very iterestig area. The aim of this article was to capture the importat poits i the evolutio of the gross average mothly wage i the coutries of the Europea Uio ad to aalyse the differeces amog coutries. There was the compariso of gross average mothly wages of EU coutries from 2002 to Some values were difficult to detect. The collectio of data of several coutries was more complex ad it had to be explored via idividual atioal statistical offices. There were other ecessary data traced. At first, it was based o Table I, which moitors the evolutio of the gross average mothly wages i the coutries of the Europea Uio. It was assumed that the omial wages always rise. But it was foud that this is ot always true. I times of crisis, there has bee a declie i the omial wages i all coutries of the Europea Uio. The largest declie was recorded i Malta ad i Irelad. Whe we looked at the whole moitored period we proceeded from the basic assumptio: year 2002 = 100% ad we foud out the icrease from this year. The largest cumulated icrease i wages was recorded i Romaia. I 2011, the last reportig year, the lowest wages were i Bulgaria, Romaia ad Lithuaia. The highest wages were i Luxembourg, Demark ad Irelad. Aother part of the aalysis was focused o developmets i more detail. It was calculated the average growth rate. The highest average growth rate was recorded i 265

Romaia, Bulgaria, Estoia ad Latvia. Last aalysis, which was icluded i this article, was a compariso of the real wages ad the labour productivity i the coutries of the Europea Uio.

Ad it is a problem of Europea Uio. For processig the article was used a large amout of resources, they were mostly iteret sources. These were based o publicly available databases. REFERENCES [1] A.

5 Romaia, Bulgaria, Estoia ad Latvia. Last aalysis, which was icluded i this article, was a compariso of the real wages ad the labour productivity i the coutries of the Europea Uio. It is evidet that wages grow faster tha labour productivity i all coutries of the Europea Uio. If wages grow faster tha productivity, it meas that the costs of compaies grow faster ad prices rise. Ad it is a problem of Europea Uio. For processig the article was used a large amout of resources, they were mostly iteret sources. These were based o publicly available databases. REFERENCES [1] A. Kutscherauer, H. Fachielli, J. Sucháček, K. Skoka, M. Hučka, P. Tuleja, ad P. Tomáek, Regioálídisparity. Disparity v regioálím rozvoji země, jejich pojetí, idetifikace a hodoceí. Regioal disparities, 1 st ed. Ostrava: VŠB-TU, pp , [2] Miistry of Regioal Developmet. (Jauary 2013). Defiitio of regioal disparities. [Olie]. [3] J. Čadil, Regioal ecoomics, 1 st ed., Prague: C. H. Beck, pp , [4] UNECE Statistical Divisio Database, compiled from atioal ad iteratioal (OECD, EUROSTAT, CIS) official sources. (December 2012). Gross Average Mothly Wages by Idicator, Coutry ad Year. [Olie]. _r&path=../database/stat/20-me/3-melf/&lag=1&ti=gross+ave rage+mothly+wages+by+coutry+ad+year. [5] Eurostat. (Jauary 2013). Labour productivity. EU: Eurostat. [Olie]. [6] M. Tvrdo ad K. Skoka, Regioal disparities ad the ways of their measuremet: The case of the Visegrad Four Coutries, Techological ad Ecoomic Developmet of Ecoomy, vol. 17, pp , Oct [7] Cetral Statistical Bureau of Latvia. (December 2012). Gross Average Mothly Wage i Latvia. Cetral Statistical Bureau of Latvia. [Olie]. [8] Czech Statistical Office. (Jauary 2013). The developmet of habitats. Prague: Czech Statistical Office. [Olie]. [9] Ecoomic policy departmet. (December 2012). Gross Average Mothly Wage i Malta. Malta: Miistry of Fiace. [Olie]. urvey2011. [10] Eurostat. (December 2012). Labour cost. EU: Eurostat. [Olie]. BulkDowlo?file=table_of_cotets_e.pdf. [11] Eurostat. (Jauary 2013). Gross domestic product. EU: Eurostat. [Olie]. [12] W. Molle, Europea Cohesio Policy, 1 st ed., Lodo: Routledge, 2010, p [13] Statistical Service of Republic of Cyprus. (December 2012). Gross Average Mothly Wages i Cyprus. Cyprus: Miistry of Fiace, Republic of Cyprus. [Olie]. rchive_e/labour_31mai_keyfarchive_e?opeform&yr=2009d87 D0C1BDA9ECC543A993A11B7C1FF8D&=2009. [14] Statistics Lithuaia. (December 2012). Gross Average Mothly Wage i Lithuaia. [Olie]. ble=m &plaguage=1&tablestyle=&buttos=&pxsid=585 7&IQY=&TC=&ST=ST&rvar0=&rvar1=&rvar2=&rvar3=&rvar4=&r var5=&rvar6=&rvar7=&rvar8=&rvar9=&rvar10=&rvar11=&rvar12= &rvar13=&rvar14=. [15] F. Wishlade ad D. Youill. Measurig Disparities for Area Desigatio, 2 d ed., Purposes: Issues for the Europea Uio. Regioal ad Idustrial Policy Research Paper 24, pp , [16] Worldwide Iflatio Data. (Jauary 2013). The Rate of Iflatio i Netherlads. [Olie]. o/cpi-iflatio-the-etherlads-2011.aspx. K. Gajdová was bor i Ostrava i the Czech Republic o the 21 st of Jue She studied busiess academy i Ostrava ad the she studied at the Silesia Uiversity i Opava, School of Busiess Admiistratio i Karvia. Now she studies for Ph.D. whereas she is employed as academic staff at the Silesia Uiversity. She also works for the Regioal Developmet Agecy, it is a istitutio dedicated to the developmet of Moravia-Silesia Regio. She deals with the regioal disparities ad atioal ecoomies. She has published may articles durig her studies ad work, for example: Uemploymet i the Europea Uio cotext with selected idicators i 2010, Chages i selected characteristics of the EU labour market i times of ecoomic crisis these papers were preseted at a coferece i Barceloa, Spai. P. Tuleja was bor i Ostrava i the Czech Republic o the 31 st of March He studied at the VŠB-Techical Uiversity of Ostrava. I 2008 he graduated successfully habilitatio ad he is associate professor ad ow he prepares for gettig the title Prof. Immediately after the study bega workig at the Silesia Uiversity i Opava, School of Busiess Admiistratio i Karvia, Departmet of ecoomics. Sice 2010 he is head of departmet of ecoomics. Ad sice Jauary 2013 he is the dea of the School of Busiess Admiistratio i Karvia. He is respected expert i the field of ecoomic, policy ad goverace. Moreover he works i other public istitutios. For example he is member of Committee of the Social Coucil of Moravia-Silesia Regio, a member of the Expert Group for Strategy of Developmet of Moravia-Silesia Regio ad so o. Whereas he works at the Silesia Uiversity he authored more tha 180 publicatios i the field of ecoomics, ecoomy policy, etc. 266

Canada & Alberta Essential Skills Challenge

Canada & Alberta Essential Skills Challenge Caada & Alberta Essetial Skills Challege Craig Alexader Seior Vice-Presidet ad Chief Ecoomist The Coferece Board of Caada September 2017 cofereceboard.ca Who we are: Caada s foremost idepedet, ot-forprofit