From “Nasdaq”:

Workers in Europe are looking for wage increases to help recover lost purchasing power due to higher prices. However, higher salaries could undermine the ECB’s efforts to bring inflation back to normal levels. The wage growth expected across the euro zone is 4.6%, well above the 3% rate considered consistent with the ECB’s 2% inflation target.

Higher wage settlements present a risk to the interest rate cuts expected in April. Financial markets anticipate cuts, but a 4.5-5% hike is on the horizon, pushing inflation and necessitating the ECB to maintain higher rates.

Wage hikes are encouraged by low unemployment and cooling inflation, lifting fat corporate profit margins. European workers, who saw their real wages drop by 5% in 2022-23, are again demanding a fair deal. U.S. companies, including Tesla and Amazon, have already faced strikes in Europe.

The Indeed Wage Tracker, which keeps tabs on salaries advertised on the website, is a closely-watched indicator by the ECB. December’s increase to 3.8% from 3.7% points to future trends as new wage deals drive growth, further increasing salaried employees’ prospects in 2024.

Recent wage settlements show that wages are on the rise, including a 6.6% increase for Dutch rail workers and 17.6% minimum hourly rate for French Uber drivers. In addition, minimum wage hikes were seen in Germany, the Netherlands, and Spain.

Workers are poised for higher wage growth, with certain sectors demanding a reversal of falling membership and restoration of living standards. French state-owned power group EDF employees are demanding a 6% wage increase, while German rail workers rejected an 11% rise and some Amazon workers staged walkouts.

Wage militancy could backfire if it leads the ECB to keep interest rates higher to curb increased demand. Although there are few signs of a wage-price spiral, the overall economic outlook for European economy could prompt companies to absorb the higher wage costs and boost sales.

In the face of global labor and deglobalization, labor’s share of the profit is increasing – a shift investors believe will persist, leading to higher inflation and rates. Workers’ energy to stand their ground is growing, and wages are expected to increase.

For additional details, refer to the links provided in the news article:
https://tmsnrt.rs/47EboHu
https://tmsnrt.rs/4aU5wgt



Read more: ANALYSIS-ECB faces bumpy road to low inflation as wages rise