Why did creating the Eurozone cause the cost of labor to rise in Greece? As I understand the implementation of the Euro as a common currency caused labor prices to spike in certain countries, Greece being one of them. Why did this happen? Why did it affect certain countries more than others?
I think we should ask why didn't Germany's labor cost increase, while everyone else's did:



The eurozone had economic growth before 2008, so appreciating labor was expected, especially due to increasing labor mobility. Wages were converging to Germany's.

In addition, Southern Europe saw an influx of capital (this is how they caught the debt crisis). Capital triggered some speculative economic growth — 4% in Greece — and an increase in wages.

One more thing. When the crisis hit in 2008, the private sector fired a lot of people. But high-paid employee remained. Which lead to this 12% pike in the business sector alone, as the average wage of the remaining workers increased:

Unit labor cost, year-to-year change: Business sector services only




Data source


The public sector kept its employees, so on average you have no peaks in 2010 (the first figure). And after 2010, you see a decline — basically caused by the same determinants, now working in the opposite direction.