Partly stronger than inflation: wages could actually rise

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Unions are rejoicing: Salaries will finally increase starting next year! “After difficult years, we are reaping the fruits of our work,” Daniel Lampart (55), chief economist of the Swiss Federation of Trade Unions (SGB), tells Blick. Although negotiations are still ongoing, so far it has been possible to negotiate an average wage increase of 2.5 to 3 percent.

A stormy fall in wages was expected in the summer. High inflation after the pandemic caused real wages to fall. According to the analysis of economic consultancy firm Wellershoff & Partners, there was a decrease of 3.1 percent between the beginning of 2021 and mid-2023. That’s why unions demanded a five percent wage increase in July. Meanwhile, employers’ expectations were around two percent, as shown by a survey of 4,500 companies by the Center for Economic Research (KOF) at ETH Zurich.

Employees in powerful positions

The employee side is strong due to labor shortage. This is also reflected in the preliminary negotiation results. “But this is not a dream gig,” says Simon Wey, 47, chief economist at the employers’ association. The five percent demanded by the union federation, understood as compensation for past wage negotiations, remained misleading.

After all, money must first be created for wage increases. “Right now it’s no longer possible.” Because companies are showing restraint due to the bad economic outlook. They don’t want to pay too much for backup.

Accusations were frequently made that companies were enriching themselves under the guise of inflation. Wey disagrees. “Unfair price increases are not possible as the majority of companies face international competition.” Additionally, as a result of inflation, for example due to rising energy prices, companies’ margins are also falling.

Experts agree with unions

There is now at least enough increase in real wages in certain sectors. At Coop, for example, there was “the highest wage increase in years,” as unions reported.

“Part of the journey is complete,” says Lampart. But it’s important to continue to catch up over the next few years. Because it cannot be said that every sector is successful. In particular, wage negotiations with the construction masters’ association failed.

Experts also agree with the SGB’s cautious optimism: According to economist Klaus Wellershoff (59), wages will rise faster than inflation in the next two years. But this is not just a positive situation. “Central banks won’t take kindly to this.” Because higher wages will increase demand and it will be difficult to achieve a decrease in inflation.

Lampart sees this as negligible. Even by the end of this year, wages will be no more than one percent above inflation. There are bigger concerns than a possible rise in inflation: “Many workers earn too little to get by.”

Source :Blick