ETUC tells European Central Bank to stop thinking inflation and start acting on growth
At the meeting of the Macro- Economic Dialogue on political level , [1]the European Trade Union Confederation (ETUC) delegation urged the European Central Bank (ECB) to get its priorities right.
With the euro area economy in the doldrums and with wage trends moving downhill (see attachment), second-round effects on inflation from oil prices will simply not materialise. Instead, the real danger is on the side of economic recovery and growth: High oil prices are dragging growth down by eating away the purchasing power of households. European policy makers should therefore focus on ways to bolster domestic demand, and certainly not try to stifle demand even more.
Says John Monks, General Secretary of the ETUC “All this talk about raising interest rates is undermining economic confidence and endangering the recovery. With real wages sitting tight, the ECB should simply ride out the oil price hike. After five years of slowdown, Europe can not afford another year of meagre growth”.
ATTACHMENT
Recent bargaining trends
| Collective bargained wages euro area level | |
| 2002 | 2.8 |
| 2003 | 2.6 |
| 2004 | 2.4 |
| 2005 | 2.3 |
Source : ETUC annual questionnaire 2005
[1] The Macro Economic Dialogue is a forum set up by the 1999 Cologne Council. It meets twice a year to discuss macro - economic policies with the aim of improving the policy mix and support high sustainable growth. European Social partners, European Commission, European Central Bank and Finance Ministers are amongst the participants.
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