ECB: Do not overdo it with salary rise requests
Trade unions should avoid excessive demands for salary increases, said European Central Bank (ECB) Vice-President, Luis de Guindos.
High inflation in recent months, at levels not seen in Europe for decades, has led to a significant real reduction in Europeans’ standard of living.
Across Europe, workers’ organizations have stepped up efforts for increasing salaries, including strikes, and the bargaining power of workers in some industries has also been strengthened by a lack of skilled labour force.
All this increases inflationary pressures throughout the economy and increases the risk of a spiral of salary inflation, when rising prices put pressure on salary increases, which then creates additional cost pressures and accelerates inflation. In such a case, inflation can be long-term and get out of control.
De Guindos admits that employees justifiably expect wage increases due to price hikes, but, according to him, the abovementioned spiral must be avoided. There are „no winners“ in it, he told the German newspaper Suddeutsche Zeitung.