Part of the explanation is a perception of greater competition from both globalisation and technology. An increased sense of uncertainty among workers is also likely to be playing a role, as is a change in the bargaining environment. The slow growth in wages is contributing to low inflation outcomes globally.
In particular, in the first half of last year we perceived a situation last year where severe upward pressure on sovereign yields was being driven by unfounded fears about the future of the euro area. These fears were causing investors to charge risk premia to lend to some Member States that could not be justified by economic fundamentals.