Demands of CESI to counter surging inflation for workers

In the resolution, CESI requests:

1. Policy makers and central bankers must change their narrative about inflation. They must acknowledge that it is largely unknown when it will go back to normal by itself and that measures must be taken to bring it back to normal. The ECB, policy makers and social partners should run an open and honest discourse on how the ECB may effectively and swiftly respond to inflationary pressures without choking off the post-Covid economic recovery which has been made possible as a result of its asset purchase programmes in Southern Europe in particular.
2. Calls by unions and social partners for statutory minimum wage increases and collective agreements with wage and pension increases that reflect inflation must be taken seriously and heard by policy makers and employer-counterparts. The expected further economic recovery and profitability of business make wage increases possible. While the causes of inflation are well-known, adjusting wages to them while they last will not cause a wage-price spiral. It is clear that once inflation decreases, wage increases will decrease also. Wages must always reflect the profitability of business (pay checks must increase if firms perform well), the productivity of workers (salaries must increase if staff becomes more productive), and not least inflation (wage developments must reflect price in- and decreases).
3. Governments must take appropriate relief measures to shield low- and middle-income households incomes from inflation. This could include raised general tax credits and further increases in allowances for rent, energy consumption, foodstuffs, health care and societal participation. Punctually, additional flexibility in the EU’s fiscal governance framework may be necessary to enable governments to take action, for instance in the form of a suspended Stability and Growth Pact also in 2023. However, to re-balance public budgets, capital taxes could also be increased and VAT raised for high consumption and luxury products. More generally, tax avoidance and tax evasion by investors and multinational companies still represents a large financial resource which remains as a result of legal and illegal loopholes and which should be tapped.

CESI Secretary General Klaus Heeger said: “Since mid-2021, inflation has been surging in the Euro area, and the rise in inflation that Europe witnesses is unprecedented since decades. Workers, especially in the lower income segments, perceive inflation as a real threat, which has the potential for major social unrest, if it is not dealt with. For workers and their families in Europe, the inflation levels that they have been experiencing are unacceptable if no measures are taken to re-balance their disposable household incomes. Workers must not pay the price of inflation.”

The full resolution is available here.