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ECB accused of mounting “crusade” against fair pay

The European Central Bank has been urged to stop its “crusade” against fair wages.

The European Trade Union Confederation (ETUC) says the Frankfurt-based bank "continues to use the argument" that oil price hikes will trigger a wage-price spiral. However, Brussels-based ETUC says this view is wrong on at least two grounds. “With hourly wages growing at only 2.6% and with the share of wages in total income continuing to fall, stronger growth in wage earnings does not represent an inflationary danger,” said said Reiner Hoffmann, its deputy general secretary. He added, “Second, with an overvalued euro exchange rate and with the financial system still caught in the sub-prime turmoil, the euro area needs robust wage growth to keep driving economic growth and job creation.”

He was responding to a speech given by European Central Bank president Jean-Claude Trichet at the weekend. Hoffman is also alarmed because he says the ECB lends its support to “unfair and cut-throat” competition by calling minimum wages “unnecessary,” even in a situation where pay levels can sink as low as €3 to €4 an hour. “The ECB is acting well beyond its mandate as defined by the European treaty”, said Hoffmann. “The ECB is attacking collective bargaining and fair wages to hide the fact that its board is apparently unable to provide a policy response to appreciation of the euro exchange rate and the sub-prime financial crisis by cutting interest rates. This is not helpful at all.”

ETUC represents 82 trade union organizations in 36 European countries, plus 12 industry-based federations (eupolitix.com)