High inflation has been weighing on Europe for months. Energy and food prices are rising particularly sharply. Gross wages could lag far behind price increases, says a new study.
Workers in the European Union must be prepared for a high drop in real wages in the current year. EU-wide, real wages could fall by up to 2.9 percent in 2022, according to the Institute for Economic and Social Sciences (WSI) of the Hans Böckler Foundation. In Germany, too, there is a risk of a real wage loss of 2.9 percent. The WSI experts advocated high wage demands in certain sectors.
According to the calculations, gross wages in Germany rose by 3.4 percent last year and were thus well below the general price increase. According to the WSI, this development is expected to continue in the current year. In the EU as a whole, nominal wage growth will also remain "moderate" at 3.7 percent compared to inflation.
In view of the high profits in many companies, the WSI experts warned against "a redistribution at the expense of the employees". This leads to a falling wage share and a higher share of corporate and property income in national income. In view of good company results in certain sectors, high wage demands are entirely justified, the experts explained. Arithmetically, there is potential for wage increases of around six percent for the entire economy in the EU and Germany.
Due to the current situation, forecasts are subject to a high degree of uncertainty. However, this should not lead to "woodcut-like simplified conclusions". "Unilateral demands on the trade unions to forgo wage increases in the overriding interest fall short and fail to recognize the causes of the current price dynamics," explained the WSI. Instead, an appeal to companies "to practice 'profit restraint' on their part" is appropriate.
Inflation has been high for months, in July it was 7.5 percent in Germany according to preliminary figures from the statistical office. Energy and food prices rose particularly sharply. In ongoing bargaining rounds, the unions also argue with the high price increases.
