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Economy

Rising Wages in Emerging Economies: What Does it Mean for the West?

A new labor report shows the gap between developed and developing worlds narrows not just because of their growth, but our decline

PARIS - The International Labor Organization (ILO) has released a new and very detailed survey on wages in 115 countries. As always the study's results are highly anticipated, as a global snapshot of trends in wages, economic growth, productivity and living standards.

This year's conclusions can be divided into two key areas: wage progress in many (but not all) emerging economies, and the general economic standstill in developed countries.

During the worst two years of the global financial crisis, 2008 and 2009, wages in rich countries did not decline as feared—but they didn't rise either. In the rest of the world, on the other hand, wages continued to climb, and in some cases, even skyrocketed. In Asia, in particular, the average worker saw a 7% increase in his wages in real terms, taking inflation into account.

In fact, the ILO report issued Wednesday found that this trend has persisted over a much longer period. Over the last ten years, average real wages have increased 25% globally. They doubled in Asia, and even tripled in some Eastern European countries. In advanced economies, however, they only increased by 5%.

Because these are averages, of course, there are some country-specific variations. In Germany, for example, wages stagnated, while in France, they grew. The ultimate takeaway, though, is the same: emerging economies are catching up, and the gap between developed and developing worlds is only narrowing. Engineers in Shanghai or Bangalore can now earn salaries not that different from what they could earn in Paris.

For years, economists have thought that emerging countries would overtake the developed world without the West slowing down. Then, they predicted that developing countries would catch up and we would slow down—a trend that many considered "normal." Today, however, many experts are saying that the developing world is catching up precisely because we are slowing down.

There is, of course, an obvious causal relationship. After all, products like electronic chips and t-shits are simply cheaper to produce in emerging economies. But this does not explain everything. In France, for example, wage stagnation can be largely attributed to a decline in our own productivity.

So, is this necessarily good news? In principle, yes. The West welcomed worker strikes in China's Foxconn factory, where a worker earns just $300 a year. And, with rising salaries, outsourcing will become less profitable for many Western economies, meaning Europe and America will have to develop their own domestic labor force.

But many Western companies are still moving to countries like Cambodia or Indonesia, where labor is still cheaper than in China. Prices for t-shirts and televisions, meanwhile, will continue to rise for European consumers.

Though this trend could be reversed, all the factors now are pointing in this direction. Even worse is the fact that the West must now rejoice: for the rest of the world.

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Society

Where 'The Zone Of Interest' Won't Go On Auschwitz — A German Critique Of New Nazi Film

Rudolf Höss was the commandant of Auschwitz concentration camp who lived with his family close to the camp. Jonathan Glazer's The Zone of Interest, a favorite to win at the Cannes Festival, tells Höss' story, but fails to address the true inhumanity of Nazism, says Die Welt's film critic.

Where 'The Zone Of Interest' Won't Go On Auschwitz — A German Critique Of New Nazi Film

A still from The Zone of Interest by

Hanns-Georg Rodek

-Essay-

BERLIN — This garden is the pride and joy of Hedwig, the housewife. She has planned and laid out everything — the vegetable beds and fruit trees and the greenhouse and the bathtub.

Her kingdom is bordered on one long side by a high, barbed-wire wall. Gravel paths lead to the family home, a two-story building with clean lines, no architectural frills. Her husband praises her when he comes home after work, and their three children — ages two to five — play carefree in the little "paradise," as the mother calls her refuge.

The wall is the outer wall of the concentration camp Auschwitz; in the "paradise" lives the camp commander Rudolf Höss with his family.

The film is called The Zone of Interest — after the German term "Interessengebiet," which the Nazis used to euphemistically name the restricted zone around Auschwitz — and it is a favorite among critics at this week's Cannes Film Festival.

The audacity of director Jonathan Glazer's style takes your breath away, and it doesn't quickly come back.

It is a British-Polish production in which only German is spoken. The real house of the Höss family was not directly on the wall, but some distance away, but from the upper floor, Höss's daughter Brigitte later recalled, she could see the prisoners' quarters and the chimneys of the old crematorium.

Glazer moved the house right up against the wall for the sake of his experimental arrangement, a piece of artistic license that can certainly be justified.

And so one watches the Höss family go about their daily lives: guiding visitors through the little garden, splashing in the tub, eating dinner in the house, being served by the domestic help, who are all silent prisoners. What happens behind the wall, they could hear and smell. They must have heard and smelled it. You can see the red glow over the crematorium at night. You hear the screams of the tortured and the shots of the guards. The Höss family blocks all this out.

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