Wifo boss warns of restraint when it comes to wage demands

Wifo boss warns of restraint when it comes to wage demands
WIFO boss Gabriel Felbermayr.

“We have to consider whether we should tie wage developments in Austria to the euro zone average or to Germany in the long term,” said Felbermayr in an interview with the daily newspaper “Die Presse”. The increases couldn’t be consistently higher, “because our productivity isn’t that much higher either.”

“Thank God we’re not in a Greek situation yet, but still have many opportunities to change course. But you have to remember that the ECB takes care of the average. That’s difficult enough as it is. But we’re even more than 2.5 percentage points above that. We have to get rid of this difference,” said Felbermayr. This requires the cooperation of all constructive forces in the country.

competitiveness at risk

Felbermayr once again warned that if inflation were to remain significantly higher than in other euro countries, as is currently the case, Austria would lose competitiveness. “And since this is a gradual process, it can easily be overlooked.” In addition, it is a new phenomenon for Austria. The automatic price adjustments for rents and many other contracts are also a problem. “If we always index all prices with the inflation of the past twelve months, then the two percent inflation target is history,” says the economic researcher.

Felbermayr recalled the economic crisis in southern European countries in the past decade and its causes. “Between the mid-1990s and the end of the 2000s, they had constantly higher inflation rates than the average for the euro zone. In a world with its own currency, that would have led to devaluations. With the euro, that’s no longer possible.” According to Felbermayr, this affects the exporting industry in particular, but also tourism, which is important for Austria.

Muchitsch sees “disastrous government failure”

SPÖ social spokesman and trade unionist Josef Muchitsch rejected Felbermayr’s suggestion that wage demands should be based on the euro zone. The fact that inflation in Austria is 44 percent higher than in Germany is due to the fact that the governing parties ÖVP and the Greens have not intervened in prices. “What is definitely not possible is that now, in view of the disastrous government failure in fighting inflation, the employees should pay for this with real wage losses,” explained Muchitsch in writing.

Source: Nachrichten

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