From the introduction:

"Wages in the crisis" is the topic of the chapter by Rory O'Farrell. He reports that the recent global recession has had differing effects on wages across Europe. The chapter presents wage patterns for EU countries since the impact of the financial crisis. The role of wages in determining international competitiveness is also examined. In fact, countries that have entered the recession relatively early, and have pursued a policy of reducing nominal prices and wages (internal devaluation) in order to regain international competitiveness, show what may happen as pressure is put on Portugal, Greece, and Spain to cut public sector wages in order to improve international competitiveness and reduce the government deficit. O'Farrell points at the numerous problems associated with the attempt to pursue a strategy of internal devaluation. In theory, its effects are supposedly simulated by reducing all prices and wages in the economy. In practice however, O'Farrell emphasises, it is wages that have been targeted by policy makers rather than other prices such as prices for consumer goods, or intermediate inputs to businesses such as rents and energy costs. Hence, with the internal devaluation it is workers who tend to bear the greatest burden. Yet maintaining the incomes of workers is essential for economic recovery. Some European countries, such as Germany, have dangerously unbalanced economies which are dependent on exports. Higher worker incomes can help to maintain and increase domestic demand, and so improve the economy. In other countries, many workers are severely indebted. O'Farrell concludes that a wage-led economic recovery will be necessary to replace the demand lost due to the bursting of the credit bubble.