Mr. Dan O'Brien:

These are some of the most fundamental questions. Let me start with some specific reactions and move out more generally. Germany has seen wages fall as a percentage of GDP, therefore, the trend in Germany is similar but households have not become more indebted. I am not sure there is a direct link between financialisation of debt and the decline in wages. Germany is different from most other countries. That is just a country to refer to as an exception.

On the issue of what is happening to wage growth and why it is lower or lower in parts, the globalisation picture comes into it. A lot of the lower skilled jobs have gone elsewhere. Is that more an explanation of why wages as a percentage of GDP have gone down? It is a possible explanation. Another explanation relates to one’s annual income. One puts 10% aside and save that every year. One does that more and more every year. The amount one has saved relative to one’s income rises over time. If one earns €100 every year and one saves €10, after ten years the amount one has saved is €100 and one’s income is €100, which means the income one is getting back from the €100 one has saved is a significant amount compared to one’s wages. Over time, as the stock of wealth rises, that is something else that has an impact on the percentage of income that comes from wages. That is another factor going into the mix.

Finally, to come to the biggest picture of all, what is really going on, there has been an argument about sectoral stagnation. The Toby Nagle argument has also come up. Another even more depressing argument is that in fact we are at the end of growth. Economic growth is over. We had a great period of 150 years of economic growth and all the figures are showing productivity is declining and we are into a period of no economic growth. There is a big debate about that.