Good news for employees: wages will probably increase by around 3.7 percent this year. In recent years they have increased more than in the Euro countries. The reason is our high inflation that the state and companies are very generously in balance. This is now fatal for the economy.
Hardly anywhere in Europe, wages were raised as much as ours. Especially for 2023 and 2024, the collective agreement is always a few percentage points higher than abroad. In total, the tariff references have been increased by 28 percent since 2020, in the euro area it was only 17.2 percent.
This year Jan Kluge expects that Austria agenda will expect another 3.7 percent more, employees in the other Euro countries probably only have an average of 1.6 percent plus on average. “This gap is getting bigger, the competitive position of the Austrian companies is deteriorating without the employees staying much more,” says Kluge.
Productivity no longer increases
By compensating for the particularly high inflation, the purchasing power of the employees was kept, but local products became too expensive in international competition. The extra problem is that productivity, ie the performance per work hour, has not increased with us for a while and, according to Wifo, should even decrease this year – but this would be the condition for paying higher wages.
The KV negotiations were still followed by the old so-called Benya formula, according to which wages rejected the inflation and productivity progress. This formula is therefore overcrowded, although the degrees should actually be under inflation.
To compensate for this, industrial companies in international competition are forced to do without part of the profit. The result is that the share of employees in the entire popular income will be nearly 75 percent in 2025, the WiFo expects. This is the highest value in 30 years. Accordingly, the business profits sink to just a quarter.
Kluge criticizes “the debt” for this development: “They are proud of the KV negotiations if there are no strikes, but if you negotiate without printing, you don’t have to be surprised if he decides according to the Benya formula.” Employers must therefore remain more difficult for the upcoming wage rounds, says Kluge.
“Stop, pass with a bad example”
However, he also sees mistakes in the state because he has raised the officials particularly generously in recent years and has therefore made the guideline for other industries. “The government must stop now, with a bad example.” In general, wage negotiations must respond much more flexibly to the situation in individual industries and companies, the economist demands. In Sweden, for example, employers and trade unions of the export industry form a compatible wage development for those, which then also functions as a benchmark for other economic sectors.
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.
