07 Oct 2023 at 05:19
Wage demands from trade unions are up to 14 percent extra for collective labor agreements, while inflation is now declining considerably. What are realistic percentages to screen with? According to the unions, there is still a lot of repair work to be done.
Last week, statistics agency CBS presented a new inflation rate for September of 0.2 percent. As a result, inflation appears to have fallen to almost zero. While trade unions are demanding significant wage increases in collective labor agreements. The FNV is aiming for 5 to 14 percent higher wages next year and the CNV is aiming for 4 to 10 percent higher wages.
The latest inflation rate of 0.2 percent is somewhat misleading, experts say. People do not feel that limited price increase in their wallets in that way. They actually feel much higher price increases.
Since June, Statistics Netherlands has been calculating the level of energy prices in inflation in a new way. As a result, the comparison with last year’s figures is not entirely correct and inflation appears lower than it actually is. According to a calculation by Rabobank, inflation in September should have been 8.8 percent if you had applied the new CBS calculation earlier.
But the calculation method that CBS used last year caused an inflation peak in September and October 2022 (more than 14 percent). At the time, the percentage was actually too high, because the statistics office only included newly available energy prices in the figures. Nevertheless, last year that percentage ended up as a target in wage demands from trade unions for collective labor agreements.
Look at a longer period
Should unions and employers now also have to work with that 0.2 percent when determining the commitment to collective labor agreements? “It remains wrong to look at such a short-lived moment. That was the case last year, but also now,” says Rabobank economist Leontine Treur. “Every month there is a new inflation figure. It would be better to adopt a long-term perspective. Collective labor agreements are also concluded over a long period of time.”
Treur proposes to take into account the inflation of this and last year. “Then prices still rise by an average of more than 8 percent on an annual basis,” she says. Viewed in this way, the wage demands of trade unions seem less crazy.
FNV director Zakaria Boufangacha says that the union always uses the inflation for the month of October as a guideline to request compensation for inflation in January of the following year. “So now too. The fact that inflation has now dropped due to the new calculation method does not change that much. We are now also looking back at last year.
Whether you use the new or the old CBS calculation method, you will arrive at approximately 15 percent inflation in two years. Last year we asked for 14 percent and we achieved an average of about 7 to 8 percent of that. We can then take the rest with us this year to repair the value of the wages.”
Boufangacha is also positive about declining inflation. “That makes the purchasing power repair easier.”
Full inflation compensation remains the aim of trade unions
The basic principle of the unions is that wages must remain at the same level as inflation, otherwise you will become impoverished. “This should also be the standard for employers,” says Boufangacha. “And I understand that it cannot be compensated at once for all sectors and employers. If necessary, they will spread the inflation compensation.”
According to the FNV member, employers will not use the now lower inflation rates in a discussion about the new collective labor agreement. “At most, they ask whether they should fully compensate for inflation at all. Or they argue that wage increases push up prices. But we have seen last year that it really doesn’t work that way.
Full inflation compensation for everyone does not seem logical to Treur. “It is not an ultimate number that you can use for every employer and every sector.
Not every employer can afford to give staff more than a 10 percent pay increase. But that is not necessary. If economically successful companies and sectors can fully compensate for inflation and others cannot, then employment will naturally shift somewhat.”
2023-10-07 03:19:27
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