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companies can raise wages significantly once

NOS NewsThursday, 16:56

A one-off substantial wage increase could rectify the economic imbalance, says the Central Planning Bureau (CPB). After all, inflation is exceptionally high – 8.8 percent last May, partly because energy is much more expensive. The Netherlands has become “collectively poorer”, and this mainly affects households.

According to the CPB, the business community in general suffers less from this, and in some cases even makes more profit. That is why the agency states that a one-off wage increase would help to distribute the burden of higher energy prices more evenly.

These higher wage costs should then not be fully passed on in the prices of products and services, says the CPB. If this does happen, a so-called wage price spiral threatens.

Cao’s

The CPB assumes that there is no automatic price compensation in the collective labor agreement. With such an agreement, the wage is always in line with inflation. “It is indeed wise for a company not to agree on automatic price compensation,” responds macro-economist Marcel Klok of ING. “Because even if the business gets worse, the costs will continue to rise.”

“You gradually see that wages are rising again. We expect that they will only be approximately in line with inflation next year.” The CPB report does not specifically look at the position of self-employed workers. But they do not necessarily have to decline in relative terms if the wages for people with a contract increase.

Scenario’s

The CPB is optimistic about inflation expectations. And thinks it will stabilize at around 2 percent in the medium term. This is because the largest price increases, such as energy, for example, are already included in the price and so no new high costs will be added.

The report describes another scenario in which inflation will remain high, but the CPB calls it “unlikely” that this will be the case.

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