Employment has continued to grow and total hours worked exceed pre-pandemic levels. At the same time, the average number of hours worked remains somewhat below its pre-pandemic level and its recovery has stalled since mid-2022. As the energy crisis fades, governments should roll back the related support measures promptly and in a concerted manner to avoid driving up medium-term inflationary pressures, which would call for a stronger monetary policy response. Fiscal policies should be oriented towards making our economy more productive and gradually bringing down high public debt. Policies to enhance the euro area's supply capacity, especially in the energy sector, can also help reduce price pressures in the medium term. In this regard, we welcome the publication of the European Commission's legislative proposals for the reform of the EU's economic governance framework, which should be concluded soon. Inflation According to Eurostat's flash estimate, inflation was 7.0 per cent in April, after having dropped from 8.5 per cent in February to 6.9 per cent in March. While base effects led to some increase in energy price inflation, from -0.9 per cent in March to 2.5 per cent in April, the rate stands far below those recorded after the start of Russia's war against Ukraine. Food price inflation remains elevated, however, standing at 13.6 per cent in April, after 15.5 per cent in March. Price pressures remain strong. Inflation excluding energy and food was 5.6 per cent in April, having edged down slightly compared with March to return to its February level.
Low price and wage inflation Not everyone benefits from a more closely integrated global economy and new technology. In many countries, the competition for low-skilled jobs has intensified, depressing wages for these workers. On the other hand, technological advances have pushed up demand for high-skilled labour for which there is a wage premium. The result is wider wage gaps. The income distribution between labour and capital has also changed. It had long been a widely-held view among economists that the labour share of GDP would remain fairly constant over time. Keynes described the stability of the labour share as “one of the most surprising, yet best-established, facts in the whole range of economic statistics”.6 Yet since 1980, corporate profits have risen faster than wages (Chart 6). 6 Keynes, J.M (1939): "Relative Movements of Real Wages and Output", The Economic Journal 49 (193), pp 34–51. 6  Norges Bank  Chart 6 Labour share. Labour costs as a share of GDP. 1) Selected advanced economies. Percent 55  55  54  54  53  53  52  52  51  51  50 1978  1983  1988  1993  1998  2003  2008  2013  Economic perspectives 15 february 2018  50 2018  1) Belgium, Denmark, Finland, France, Germany (data for West Germany before 1992), Ireland, Italy, Japan, Netherlands, Portugal, Spain, South Korea, Sweden, Switzerland, the UK and the US. GDP−weighted average.