4 
As far as the oil price is concerned, it is, however, likely 
that (short of war-like actions in the middle east) there 
will be no further major increase (in real terms). 
The second influence of tight policy works via unemployment 
on the real wage target of the trade unions. How drastic this 
effect is and how soon it operates depends on the institutional 
situation. In the course of a number of years of unemployment 
the real wage target has in fact almost every where been 
more or less eroded, so that even real wage reductions are 
now implied in some agreements. 
The wage rates are, however, not the only influence on wage 
cost: There is also productivity. How this will develop may 
not be known to the parties of the collective agreements, 
but the results as to prices and actual real wage depend 
on it. 
In fact the reduction in the growth rate of productivity in 
the years since 1974 was general and fairly drastic. Some 
people find it difficult to explain. My own difficulty is 
rather that I have two factors explaining it, and both of 
them seem to me relevant. 
The first applies only to Europe, mainly to the continent. I 
think that the productivity growth in the 50'ies and 60'ies 
has been determined largely by a process of catching up with 
the U.S. by a technology transfer which was cheap and easy.