Inflation is a phenomenon that, in a transversal way, affects the entire population. But there are those who are more impacted, such as the fragile groups, and those who are less, such as the employees of international institutions. As in the case of the European Central Bank (ECB), which is concerned precisely with price stability. The internal union of Eurotower employees, as reported by Bloomberg, wants higher wage adjustments than expected, up 1.48% this year and up 4.07% next year. With inflation over 8% in 2022, as forecast by the ECB itself, workers are asking for more increases.
“We are not happy” with the proposal, Carlos Bowles, vice president of the International and European Public Services Organization (IPSO), the internal union, told Bloomberg. “With inflation in Germany and the euro area likely to be around 8.5% this year, that means a substantial loss of purchasing power.” If real wages are lower than a year earlier, he said, “this is hurting workers’ morale and also their trust in the institution.” Last month, President Christine Lagarde explained that wage increases are “rising”, warning that a wage-price spiral would prove “self-destructive” and hinder the economy’s productive capacity in such an uncertain historical phase. However, according to the leaders of the internal union, more efforts must be made to find an agreement capable of guaranteeing correct business continuity. In this case, Bowles brought to the negotiating table with the Bank research from the International Monetary Fund (IMF) according to which faster growth in nominal wages is “not necessarily a sign that a wage-price spiral is taking hold.”
The ECB is not the only central bank where staff remuneration is causing discussion, despite the fact that there are already very high tax breaks and a very broad welfare system. Employees of the Brazilian monetary institution, as remarked by Bloomberg, have called strikes to obtain higher pay, while the Bank of Japan is also registering discontent over lower-than-expected wage adjustments.
IPSO, as reported by Bloomberg, wants to sell dearly. Bowles explained that he rejects the ECB’s methodology for calculating wage increases based on developments by the national central banks of the euro area and other European Union institutions. However, he also signaled possible ways of compromise. “We want at least a negotiation on our salaries, but the ECB is not open to that,” he said, adding that the institution is not willing to approve non-financial proposals such as additional year-end holidays. “If a negotiated approach to finding a compromise continues to be rejected by the ECB, we will need to consider protest actions early next year,” Bowles said. The battle has only just begun, as price flare-ups will remain elevated well into 2023.