Wages don’t reflect the rising cost-of-living and are unlikely to catch-up in the near future, the European Commission has warned today.
The Commission’s winter 2023 economic forecast says:
- “Nominal wage growth continued at rates below inflation rates, resulting in further purchasing power losses of employees.”
- “Current wages of many employees still reflect wage settlements agreed upon before inflation accelerated last year.”
- “A full recovery of the lost purchasing power still appears unlikely over the forecast horizon.”
ETUC General Secretary Esther Lynch said:
“Today’s forecast is further proof that inflation is being caused by a profit-price spiral and has nothing to do with wages increases which remain far below the hikes in the cost-of-living.
“Millions of people are struggling to put food on the table and heat their homes while energy and food companies make record profits as a result of price speculation.
“The Commission’s warning that purchasing power won’t recover is completely unacceptable. It’s time to tackle the real cause of inflation by taxing excess profits and helping its victims through pay rises in line with the cost-of-living.”
The forecast also shows that the European economy grew faster than expected last year and that member states are reducing their debt ratio more quickly than required by EU rules.
However, the forecast lays bare the negative effects on households and public investment of the European Central Bank’s decision to raise interest rates.
ETUC Confederal Secretary Liina Carr said:
“Stronger than expected economic growth presented in today’s forecast is a vindication of the economic support measures put in place at national and EU level in response to the pandemic and energy crisis.
“It shows any return towards austerity would be misguided in principle and in practice. Massive public investment is needed to deliver a socially just transition to a green economy.
“Europe’s strong economic development is already being put at risk though by the record hike in interest rates, which not only increase pressure on already struggling families but prevent both public and private investment.
“The EU should maintain and expand anti-crisis measures like the Next Generation EU and SURE schemes and make pro-investment policies permanent through a fundamental reform of economic governance.”