Sun, 14 March 2010
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Jean-Baptiste Piggin reports on why a battle royal is developing over pay in Europe as recession begins to bite.Calls for pay restraint as major European economies slip into recession are falling on deaf ears, with workers in numerous countries grumbling that they have gained few of the promised fruits of the last upswing.
This September, European Central Bank (ECB) President Jean-Claude Trichet has hammered out a warning against "second-round effects in price and wage setting," telling eurozone citizens to put up with high world prices for fuel and food which are beyond governments' control.
"Second-round effects" is an economist's term for a wage-price spiral: when inflation reduces real pay, workers insist on wage rises to compensate, and prices then rise because of higher labour costs. Workers then ask for another pay rise, and so on.
In Germany, the powerful metalworkers union IG Metall says it will seek a wage increase this year of between 7 and 8 percent for 3.6 million workers in industry, its highest demand in 16 years and well above the past year's 3.3 percent German consumer inflation.
Union chief Berthold Huber said factory profits rose 220 percent from 2004 to 2007 but workers gained little in the "lop-sided upswing."
IG Metall's demand is expected to influence pay-bargaining throughout the 15-nation eurozone.
Similar impatience in the working and middle classes amid perceptions that they are slipping back has emerged in Britain.
The Labour government's determination to restrain pay for public-sector workers will be challenged this autumn by teachers and civil servants, who say they are no longer prepared to live on wages eaten up by rising costs for food and fuel.
So far, Prime Minister Gordon Brown has argued that low wage demands over the past few years have contributed to economic growth and stability, low unemployment and a rise in living standards.
Here's a short introduction to our Renting a house or an apartment section for France.
Here's a short introduction to our Where to Live section for France.
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