Currently, there are constant voices from business and politics that higher wages could drive up prices. However, according to the Austrian Institute for Economic Research (WIFO), this is wrong. Higher wages would be the result of inflation.
“The accelerated collective wage growth from January 2023 even increased inflation in that month by about half a percentage point. However, the effect did not last, but disappeared again in March 2023,” calculated WIFO economist Stefan Schiman-Vukan. “While compensation for real wage losses will not trigger a wage-price spiral, it will exacerbate the deterioration in price competitiveness caused by overinflation in Austria.” Moreover, the reduced competitiveness is at the expense of companies.
Trade and the metal industry, among others, are currently negotiating the collective labor agreement for 2024. While the social partners in the trade sector, which has almost 500,000 employees, have only just started their discussions, the fourth round of negotiations is in the metal technology industry with approximately 120,000 employees have already failed. The GPA and PRO-GE unions are responding with warning strikes from Monday to Wednesday.
NEOS: Situation avoidable
“This situation could have been prevented,” says NEOS economic spokesman Gerald Loacker. The federal government is obliged to create room for higher wages. In a press release, he cited examples of a significant tax cut and additional wage costs, which would ease the burden on both parties. While the unions continue to demand a wage increase of 11.6 percent, the employers’ offers are ten percent plus two one-off payments of 750 euros over two years, and 8.42 percent plus one-off payments.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
