CESI@home on energy Crisis and Inflation: What impacts on workers & citizens and what consequences for unions?

As war in Ukraine takes a terrible humanitarian toll, the world is facing far-reaching and unpredictable political, economic, social and geopolitical consequences.

For European citizens and workers, inflation is becoming an increasing threat. Already before war broke out in Ukraine, prices were getting higher in the EU across many commodities and outpaced wage increases in many places. Since then, the Russian invasion of the country has caused further soaring prices especially for energy. This concerns above all gas and oil for heating, fuel for transportation, and electricity.

Amid the turmoil in Ukraine and a difficult Covid recovery, citizens, workers and consumers face increasing challenges to their wealth and social standards and see their financial security and purchasing power at stake. Especially the low and even the middle-income households are exposed to imminent poverty risks if wages or other support mechanisms cannot compensate price increases.

On Friday, April 8, CESI shed light, as part of a CESI@home event, on impacts of energy inflation on citzens as workers and consumers as well as on the consequences that this will have on unions. During the event participants made clear:

• The issues that citizen-workers and citizen-consumers face go beyond just energy inflation and acute impacts of the war in Ukraine. Prices also for basic commodities other than energy, including for rents and basic nutrition, have been rising starkly and this already before the current military escalation in Ukraine. Moreover, there is no reason to believe that inflation will decrease by itself in the foreseeable future. Just accepting inflation climbing towards 2-digit levels and beyond cannot be an option. The decrease in living standards for tens of millions of hard-working people across the EU would be enormous.
• Urgent measures have to be found to keep inflation at bay and maintain the meltdown of purchasing power of workers in Europe. In the short-term, substantial relief measures financed by the state are needed especially for lower income groups and spanning across at least the goods that make up their largest shares of expenditure: energy, foodstuffs and rents.
• Policy makers and central bankers need to be find ways to enable the European Central Bank (ECB) to return to its raison d’être and mission: price stability and the maintenance of inflation at just around 2%. This may require an end of the ECB’s asset purchase programmes. If these are phased out, this could bring adverse financial and socio-economic impacts in the more indebted Euro countries. New political measures would need to be designed to mitigage these impacts.
• Measures by the ECB and policy makers to bring down inflation and support the most vulnerable must be accompanied by an extraordinary, one-off wage, pension and social security benefits increase to ensure that living standards are maintained over time. This would prevent potentially dangerious wage-price spirals. Unions together with employers, as social partners, need to make an extra effort to achieve this.

The event brought together speakers including CESI Secretary General Klaus Heeger and Elena Donnari from the European Commission’s Directorate-General for Energy as well as Javier Jordán de Urries from CESI’s Spanish member CSIF and Patrick Fey from CESI’s Dutch affiliate CNV-Connectief – both also Vice-Presidents of CESI.