According to De Jong, employers are not insensitive to the needs of their employees who are faced with persistent inflation. Even what plays a role: public opinion on the side of employees. De Jong does not rule out the possibility that there is simply room for wage increases. “Perhaps it’s also true that many companies have room to raise wages quite sharply.”
Wage-price spiral
According to the employers’ club AWV, the wage increase is 8.2%, employers, as well as De Nederlandsche Bank, are warning of a wage-price spiral. “It’s lurking or it may have already started,” says De Jong, who also has an eye for the position of the FNV union. “The union movement also looks to the long term”.
Economists look at the so-called labor income share, the share of our national income that goes to employees. According to De Jong, that quotation is lower than 30 years ago. “So from their point of view, a pay raise is an understandable goal.”
In the meantime, we have to wait for what the US central bank will do at the Fed today: another interest rate hike or a slowdown? De Jong suspects the latter because inflation in the US is stabilizing somewhat and because the interest rate weapon always works with a lag. “If you keep raising interest rates until you hit your inflation target, you’ll likely go bankrupt.”
And that would mean unnecessary damage to your own economy. De Jong therefore thinks the Fed will pause to take a closer look at inflation data in the coming months. There’s not a very clear picture, but the Fed has already raised interest rates 10 times in a row to an unprecedented rate.