, Columnist
Draghi Is Right to Hold Out for Wage Growth
Europe's recovery hasn't yet translated into higher pay for workers.
His eye on pay packets.
Photographer: Peti Kollanyi/BloombergThis article is for subscribers only.
Call it the mystery of missing wage growth. The euro zone recovery is gathering pace, but there are no signs this spurt of activity is giving workers the pay rise they have been waiting for. Wages rose by a mere 1.6 percent at the end of last year. This is well below the historical average of 2.1 percent.
This puzzle also matters for rate setters at the European Central Bank. The ECB on Thursday upgraded its growth forecasts for the euro zone, but cut its predictions for inflation. The reason is that energy prices have fallen again. Meanwhile, underlying inflation remains low and flat. Until wage growth picks up, it will be hard for the ECB to hit its target of just below 2 percent.