Eurozone wages are rising after a lost decade, but some wage increases could be ephemeral as employers across the bloc are opting to give one-off bonuses rather than permanent increases amid the uncertain outlook for growth and inflation.
The preference for temporary increases can be frustrating for workers, who are facing a cost-of-living crisis, but will be welcomed by European Central Bank (ECB) monetary policymakers, who fear a feedback spiral between wages and inflation.
At first glance, the data seems to indicate that employers and the ECB are slowly but surely losing the battle: negotiated wages rose by 2.8% in the first quarter. This was the fastest pace since early 2009, boosted by a 4% jump in Germany, the largest of the 19 economies that make up the eurozone.
But once one-off payments are excluded, the German jump was only around 2%, suggesting that companies have shelled out funds to alleviate the impact of inflation and the pandemic on their employees, but in a limited way and that should not perpetuate the rise. of prices.
There is evidence that companies from Italy to France and the Netherlands are taking similar steps, mitigating what is yet to become a difficult-to-contain wage increase.
“Employers have committed and don’t want to reopen negotiations,” said Boris Plazzi, salary negotiator for the French union CGT. “The workers, therefore, retreated and resigned.”
The war in Ukraine is another factor holding back wage growth, as the bleak outlook and growing rumors of recession make people fear for their jobs.
“In upcoming salary negotiations, uncertainty about economic development and concerns about possible job losses could dampen salary increases,” the German central bank said.
The ECB has long argued that wage growth of 2% to 3% is consistent with an inflation rate of 2%, its medium-term target.
Source: CNN Brasil
