(Finance) – “Minimum wage policies can contribute to rebalancing economic returns in favor of workers and can trigger a positive reallocation process, penalizing companies that operate with monopsonistic inefficiencies”. This is what the deputy general director of the Bank of Italy Piero Cipollone in his speech at the opening of the sixth Bank of Italy-Cepr workshop on labor market policies, citing the research of Nobel Prize winner David Card and co-author Alan Kruger. “The institutions – continued Cipollone – play a crucial role in defining the redistribution to workers of the economic rents accumulated by companies due to their monopsony power on the labor market. Companies can pay low wages inefficiently or exercise their power by offering only temporary and short-term contracts. Policies that encourage companies to offer permanent and full-time contracts can act as a safeguard to protect workers. On the other hand, although the effect on aggregate employment is not determined ex ante, these measures could lead to a decrease in employment levels in some companies.”
“There strong growth in employment, which began with the end of the pandemic, could soon come to an end following the recent economic slowdown in the eurozone – said the deputy general manager of the Bank of Italy -. The re-establishment of the purchasing power of wages should be linked to the achievement of productivity growth”. Cipollone underlined how “despite the strong demand for significant increases in wages, in some countries, especially those with a reduced labor market, general growth wages have remained relatively modest and real wages are still well below pre-pandemic levels.”
“The inflationary pressures, generated largely by the growth in prices of raw materials and intermediate goods and by shocks to global value chains, – underlined Cipollone – may have reached their peak in recent months, but their persistence presents upside risks”.