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Eurozone Hourly Labor Cost Growth Slows In Q1

The euro area hourly labor cost grew at a slower pace in the first quarter, data from Eurostat showed on Wednesday.

Hourly labor cost increased 1.5 percent on a yearly basis, much slower than the 2.8 percent increase seen in the fourth quarter of 2020.

The two main components of labor costs were wages and salaries and non-wage costs. The costs of wages and salaries per hour worked rose 2.2 percent, while the non-wage component dropped 0.9 percent.

The non-wage component moderated the growth in hourly labor costs, in particular due to the tax reliefs and subsidies granted by EU governments to support enterprises affected by the crisis.

Average hourly labor cost growth slowed in the first quarter, and wage growth is expcted to remain subdued over the coming years, Jack Allen-Reynolds, an economist at Capital Economics, said. This will keep underlying inflationary pressures down.

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