A Spanish unionist asked me what happens if productivity increases because of disemployment. Would the 'wage rule' still hold? The wage rule is that wages should follow productivity and inflation, in order to keep the wage share constant.
The answer is yes, because the composition of the work force and output have both changed. Suppose low-paid, low-productivity workers were dismissed, then the output per worker will increase, but as the high-productivity workers are already better paid, this implies a natural increase of the average wage. You don't have to negotiate anything. However, if there is an additional increase in productivity, because of productivity enhancing investments, that would be the basis for wage claims.
This choice implies that you stick with the 'single productivity' measure. Wage claims in one, suppose a labour-intensive, sector based on overal productivity growth will cause the labour share in that sector to further increase. Now, on the demand side it does not matter which sector delivers the disposable income, but at the labour market, deviations from the sectoral labour share derive from the production technology (the amount of capital and labour that is optimal for any production level). This implies that a shift in the structure of the economy will create imbalances: suppose well-paying sectors would entirely disappear and only the car industry remains with high output but low wages, then there would not be enough disposable income and either car prices would drop or wages should increase.
