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Sunday, January 29, 2023

Wifo boss Felbermayr: “Leave the watering can in the shed more often”

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“We have to create the conditions so that we can help in a more targeted manner in the next crisis,” Felbermayr demanded in the ORF “press hour” on Sunday. High inflation will accompany the country for a long time.

The director of the Economic Research Institute (Wifo) repeatedly regretted that it had not been administratively feasible to link aid such as the electricity price brake to household size and income levels. On the one hand, there are not enough incentives to save energy, Felbermayr affirmed, and on the other hand, this also fuels inflation. And with this “unfortunately we will have to live with high numbers for a long time, even if they will decrease”. The Ministry of Finance has “spent a lot in recent years, paid out a lot of real help, but the more you support, you drive demand and that drives inflation”. The watering can should be left in the shed more often.

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Video: That’s what Felbermayr said in the press hour on the subject of “measures against inflation”

6.5 percent annual tax

For this year, Wifo expects annual inflation of 6.5 percent. The forecast could possibly be lowered if energy prices remained at the current level. This is lower than feared due to well-stocked gas storage facilities and a mild winter so far.

“It is already clear that wage increases lead to a sustained increase in prices,” said Felbermayr. But he doesn’t see a wage price spiral, “I don’t like the word spiral in this context.” The recent KV negotiations, some of which have become heated, have shown “that the wage policy based on social partnership actually works – even in times of stress”. Purchasing power will increase thanks to the deals for this year and next year.

Video: Concerns about high inflation

According to Felbermayr, consideration should also be given to how rent increases can be flattened. The increase has already taken place in recent years and has now been exacerbated by inflation. Not only are rents going up, so are operating costs. Basically, there is too little supply in the domestic metropolitan areas compared to demand, which is heating up prices. “I would warn against further grants without thinking about it fundamentally.” There is also international evidence of increasing monopolization, and it is also a matter of competition.

Strengthening of the Federal Competition Authority

In connection with the topic of competition, the scientist called for the Federal Competition Authority (BWB) to be strengthened, which should be “tackled very precisely” on such topics. “There is definitely a need for more resources,” says Felbermayr about the BWB’s equipment. It could be that there are price gouging due to strong concentrations. “It’ll do you good to take a look.”

The Wifo boss regretted that there was no major reform of unemployment insurance because the ÖVP and the Greens could not agree. The issue must be addressed in the next legislative period. Regarding better incentives to continue working even at a slightly older age, Felbermayr said that although this is good, it is also not a real lever in terms of the number of workers who can be hired. On the contrary, the part-time level in this country is far too high and far too few women are in the workforce, Felbermayr affirmed.

Video: Felbermayr on the subject of labor shortages

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Source: Nachrichten

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