In addition, we calculated on unit labour costs increasing by an average of almost 3 per cent a year in 20072010, to be compared with largely 0 per cent a year in 2002-2006. The high inflation rate could affect wages through demand for compensation for the price increases. However, this does not seem very likely at present. The slowdown in growth and the expected weakening of the labour market are factors that weigh against such a scenario. In addition, we now have three-year agreements in most areas of the labour market which regulate the agreed wage increases. Nor are there, as there were in the 1970s and 1980s and are in some other countries, price guarantees in the agreements that provide automatic  4  BIS Review 100/2008  compensation for price rises. These were abolished in connection with the so-called Rehnberg agreement at the beginning of the 1990s. It is, on the other hand, important that inflation and inflation expectations fall to around 2 per cent ahead of the next round of collective bargaining in 2010. With the current inflation forecasts, average inflation over the three preceding years will then have been over 3 per cent, which may be a problem. However, this would nevertheless mean that real wages prior to tax increase by around 1 per cent a year during the current three-year agreement period. After tax the increase is larger, perhaps 2-3 per cent a year. 3.
These frameworks, which have been put in place during the good times, are also being supported by ongoing work, in the area of building a consistent regulatory environment given the increasing presence of Asian banks in each others’ jurisdictions. This is reinforced by cooperation among national supervisors and in the development of arrangements for crossborder resolution. Regional platforms have been established for structured forums for the assessment of risks and vulnerabilities to the region, to increase the prospect for pre-emptive actions to be taken. Collaborative efforts are also ongoing in the area of building regional financial infrastructure, including the financial markets and payment systems to facilitate the efficient intermediation of financial resources in the region. Collaborative efforts are also accorded to the area of anti-money laundering, to ensure the integrity of the increasingly integrated financial systems in Asia. Finally, collaboration has also progressed in the area of capacity building, to strengthen the institutional capability of the central banks in the region to deal with the new challenges of the new environment. Finally, one of the most significant but often under-appreciated trends across most economies in these recent two decades, is the significant rise of inequality within economies. The economic crisis has worsened this trend given the conditions of high unemployment in many parts of the world. In many areas of policy-making, inequality is often not given explicit consideration.