Collective bargaining wages have risen more and more in recent months, such as on construction sites, in the field of education and also among civil servants. This is good news for employees, but why is it happening now? And do wage increases also have disadvantages?
Wages are likely to rise by about 3 percent this year, the employers’ association AWVN expects. This is an average because such wage increases are often already stipulated in various agreements.
Teachers in primary and lower secondary schools, for example, receive an average of 10 percent more in salary. In construction, wages will increase by 5 percent and in the state, average incomes will increase by about 9 percent over the next two years.
“We have to go back in time significantly to see comparable figures,” says Pierre Koning, professor of economics at VU University Amsterdam. “The last time was probably in the 1980s. Wages have risen over the last forty years, but by 1 or 2 percent, not as large a percentage as they are now.”
Inflation, corona and a tight labor market are causing increases
According to Koning, wage increases are linked to three factors: inflation, the corona crisis and labor market shortages. “The end of the lockdown has exacerbated this austerity. This means that employers now have to offer a higher salary, in order to remain attractive to their employees.”
The appeal of a higher wage is further stimulated by inflation. “Everything is getting more and more expensive, and people want money left over at the end of the month.” In addition, we are still living with the consequences of the corona crisis. “The support programs have stopped and fewer people have been hired during the closure, so companies now have to make an extra effort to retain or attract staff.”
“The average wage increase of 3 percent is still too small compared to an inflation of about 7 percent.”
Zakaria Boufangacha, Vice President of FNV
That puts the employee in a pretty strong position, says Zakaria Boufangacha, vice president of FNV. “Due to the tight labor market and high inflation, people dare to make demands and we as a trade union are also stronger to negotiate.” As a result, in the state, for example, it is now mainly people with low and middle incomes who benefit. For example, the salaries of cleaning assistants will increase by about 20 percent in the coming years. “It’s a significant improvement in purchasing power, and it’s very necessary, too.”
The wage increase does not cover inflation
But according to FNV, the employees are not there yet. “The average wage increase of 3 percent is still too small compared to an inflation of about 7 percent. Businesses should at least compensate for this inflation, and that certainly applies to low and middle incomes.” He cites rising energy prices as an example. “Suppose you earn 2,000 euros a month and the energy bill rises a few hundred euros, then you can not afford this big bite of your finances without a significant wage increase.”
Boufangacha is convinced that many companies can afford this wage increase. “In the last two years, significant profits have been made in various sectors, so they can afford the higher wages.” However, according to Koning, there is a limit to this: “A wage-price spiral may arise in the future. This means that the higher wages will be passed on to the price, which makes the products more expensive. People then start living according to this idea. . “
As an example, Koning mentions the purchase of new curtains. “A seller can then advise: Buy the curtains now, because in three months they will be more expensive because the higher wages will be passed on. If everyone follows this advice, the demand for curtains will increase and inflation will increase even more. The problem is only in and if it happens in all sectors, the economy will be disturbed. “
What will the salary do in the future?
But when this limit will be reached, according to Koning, it is impossible to predict. “Two years ago, for example, energy prices were very low. And we do not yet know what the coronavirus will do in the autumn. So it is difficult to assess what the wages will do and whether such a spiral will develop.”
Boufangacha believes that will not happen this year. “We see that companies want to maintain their profits. That the products become more expensive as a result. So there is more of a profit-price spiral.”
“The state’s new agreement may set the tone,” says Koning. “Usually other sectors follow, such as healthcare. It is especially a strong signal to low and middle incomes, which is now making significant progress. So we have to wait and see what other sectors will do: keep it lower (national). minimum wage or follow the government’s example. “