Inflation can lead to higher wages for all segments of the population

Representatives of the European Central Bank (ECB) are very concerned that the price increase may become a spiral that will also raise wages in the eurozone. The labor market is also facing further strengthening due to the military actions in Ukraine. The threat to the economic growth of the entire region makes it even more difficult for some central banks to give some kind of definitive answer in terms of wages.

At its meeting on Thursday, most economists expect the ECB to postpone its decision to reduce net asset purchases. According to them, there is a possibility that, despite higher inflation, demand will be reduced more.

Inflation in the eurozone has been rising at a record level for the fourth month in a row, and the war in Ukraine has further affected this. The benchmark is now approaching the level of 6%, which is three times higher than the ECB's target of 2%. Another factor in the growth of inflation is the increase in energy prices. This is a problem that is likely to exist as long as Europe depends on Russian gas.

The price of energy will actually be a determining factor in what opinion the ECB will express, but economists say it is too early to calculate the impact on wages. In fact, the indicator of wage movement increased by about 5% in the US and the UK, but remains at a low level - about 2%, in Australia and in the eurozone.

These differences in rates reflect the lack of resumption of wage negotiations in Europe. Support measures have helped millions of people to keep their jobs, and only a small part were forced to look for new positions or want better working conditions.

The secondary effect of high inflation, according to some economists, is not a cause for concern, since soon after the easing of measures, the possibility of employee travel will resume, and thus wages will remain unchanged.

However, contrary to this point of view, bankers in Germany believe that Europe is suffering from a shortage of labor due to an aging population.

Barry Copeland

In 2003, Barry Copeland received a degree in Journalism from the University of Sheffield. He is a sophisticated financial journalist with more than 10 years of experience in the monetary business and the media.Also collaborates with top managers to consider expenses through financial research. His goal is to become a community-level organization consultant, so he plans to continue his training

Comments (0)