Wifo boss Felbermayr: – Even higher inflation, gas chaos threatens in the autumn

“We could be better informed,” the economist told ORF Press Hour on Sunday when asked what he knew about the turquoise-green federal government’s plans for potentially necessary gas rationing and distribution. “We don’t really know the details either.”

Call for gas ration plans
However, it is urgent and it is now necessary to determine how the energy can be directed. According to Felbermayr, priority sectors – first and without restrictions households, but also the electricity sector and food production – should be determined and within these sectors it must then be further determined how food is distributed there. Auctions could, for example, be used here.

“If you think you can democratically determine the distribution in the heat of the moment, you will be surprised,” said Felbermayr. “Who should be eliminated in which industry then?” he asks in the direction of the government. To say, “Everyone gets 30 percent less, wouldn’t be good for the economy at all. The costs will be much higher if gas rationing ends in chaos,” he warned, urging immediate preparations.

Austria is not dependent on Russian oil
In the case of oil, Felbermayr confirmed Wifo’s position, stating that it would be better to introduce import duties on new contracts rather than an embargo. In Austria there is only indirect attachment to Russian crude oil through products that went from Germany to the Alpine Republic. Much more important for Austria is crude oil from Kazakhstan. As long as this happens, the effects of an oil embargo will be small, according to Felbermayr. But: This is about the territory of Russia. “And if the Russians no longer allow this because of an embargo, then we have a problem in Austria.”

Wifo boss advises to adjust benefits more often
Due to high inflation, it is necessary to consider adjusting social benefits during the year. In general, Felbermayr spoke out in favor of indexing social benefits such as child support, minimum income and health care benefits and adjusting them automatically for inflation, as “we are not returning to the low rates we were used to”. Counter-financing could be an inheritance tax, which is treated as a “holy cow” in Austria.

Fall pay round “will certainly be difficult”
“It will certainly be difficult,” said the Wifo boss at the autumn wage round. Because the high inflation is not homemade. If you now talk about the fact that twelve billion euros of purchasing power in Austria is about to disappear, then the amount will not go to Austrian companies, but almost entirely abroad, “in the coffers of the oil sheiks and so on”. So turning off or lowering the cold progression helps and the work factor is generally alleviated.

While economists closer to employers, such as IV chief economist Christian Helmenstein, have recently warned of a wage-price spiral in what they view as excessive pay arrangements, those close to employees are speaking the opposite. Only Sunday, AK chief economist Markus Marterbauer confirmed in the “Kurier”: “If so, it should be called a price-wage spiral.” The union also argues in this way. PRO-GE boss Rainer Wimmer (SPÖ) also says about the wage negotiations that companies could pass inflation on to their customers, but employees could not pass the inflation. Of course, the companies also say that it is difficult to pass on price increases one-to-one and only with a delay.