For Gabriel Felbermayr, there is no textbook example of a solution to the “particularly difficult” wage negotiations in the metal industry this year. The Wifo director has another recommendation for the employer negotiators and the union.
“These negotiations are a division struggle; there is no recommendation from the economy,” Felbermayr said at the Business Journalists’ Club in Vienna on Thursday.
Wifo boss for adjusting the Benya wage formula
The Wifo director again spoke in favor of adjusting the Benya wage formula used in Austria. With the Benya formula – named after former ÖGB president Anton Benya (1963-1987) – the inflation rate of the past twelve months plus the average productivity growth forms the starting point for collective labor agreements. Felbermayr recommends using the inflation rate of the past three months for the KV negotiations.
Felbermayr: One-year KV qualification must be retained
By using the rolling twelve-month inflation rate, salaries and wages would only be adjusted to current inflation with some delay and the state would be forced to help with anti-inflation measures, the Wifo boss said. However, a modified Benya formula requires a transition mechanism. According to the economist, the one-year KV degree should be retained and not extended to two or three years.
‘Wifo does not say that you have to accept real wage losses’
The Wifo director has another recommendation for the employer negotiators of the metal workers and the union. If you remain ‘slightly below the rolling inflation rate’ of 9.6 percent when you graduate this year, you could ‘compulsorily increase’ this in 2024. Converting part of the wage increase into shorter working hours or more vacation will probably also be a topic at the negotiating table. “But the Wifo does not say that we have to accept real wage losses,” said the economic researcher towards the unions.
According to Felbermayr, the current order situation in the sector is “actually not good”. “But that is a rhetorical exaggeration.” The metal industry “did not cause inflation” and is suffering from increased energy and raw material costs. In the KV negotiations, “the company’s cash position cannot be an argument,” according to the Wifo boss. “Then you shouldn’t have paid out so much, it’s not a liquidity problem.”
Forecast: The Austrian economy will grow by 1.2 percent in 2024
In its October economic forecast for 2023 and 2024, Wifo assumes average PE increases in the amount of moving inflation. This year, economic output in Austria is expected to shrink by 0.8 percent and grow by 1.2 percent next year. According to Felbermayr, there are several reasons why the current KV negotiations are more complicated than before.
The Corona crisis, the war in Ukraine, high energy prices and record inflation have made Austria poorer. Purchasing power per capita, measured by GDP in the fourth quarter of 2023, is still below the 2019 level, also because 3 percent more people live in Austria. “The available ‘pie’ per person has become smaller, the fights over distribution are more difficult,” said the Wifo boss.
High salaries – higher inflation
The export-oriented industry now has to ‘pay’ for high inflation and cannot pass on the price rise of its products as easily as the service sector (including tourism, gastronomy) or trade, Felbermayr said. According to the Wifo director, high salaries in the service sector will lead to higher inflation in Austria than in the eurozone in the long term. “That makes me sick.” In a monetary union, this means “a la longue” a deterioration in competitiveness for Austrian companies and a loss of market share.
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.
