Wage moderation should start with top managers, European trade unions said on Wednesday, starting a campaign for higher workers’ pay to help faltering economic growth and diminish inequalities with management.
The campaign envisages an April 5 demonstration in the Slovenian capital Ljubljana during a meeting of EU finance ministers and central bankers, and comes after Germany discovered large-scale tax evasion among hundreds of prominent Germans. It also clashes with the European Central Bank’s repeated calls for wage growth moderation at a time when inflation in the 15 euro zone countries stands at a record high of 3.2%. “European workers need and deserve a pay rise. We want more purchasing power and we want more equality,” said European Trade Union Confederation (ETUC) General Secretary John Monks. “The trade union message is that if there is to be wage growth moderation, it should start at the top,” he told reporters. Monks said the trade unions wanted only wage growth of inflation plus productivity growth, which, on average, equaled 3.5%, while wage growth so far was 2.5%. The German investigation, involving, among others, Deutsche Post CEO Klaus Zumwinkel, a pillar of Germany’s corporate establishment, has heightened resentment towards top managers, who many Germans feel have profited from economic growth at workers’ expense.
The ETUC said Europe’s 20 highest-paid managers, receiving some €8.5 million a year, earned 300 times more than the average EU worker and that the gap had been growing. “It is corporate greed -- they are the biggest threat to the system at present, they are behaving abysmally,” Monks said. “Their actions are such an appalling example to the rest of the society that I am surprised workers are not demanding the kind of 30% increases that they have been getting over the last few years,” he said. He said governments should tell business communities that such disparities were unacceptable and either reduce them through taxation or through voluntary restraint by managers.
The ECB is concerned that if rising oil and food prices boost wage demands, inflation will be difficult to bring back to the bank’s target of just below 2%. “The European Central Bank has adopted an archbishop-like sermon tone saying ‘accept wage moderation or I will put up interest rates’,” Monks said. Wage talks are now under way in Germany, the euro zone’s biggest economy, where household demand has been weak despite a fall in unemployment, partly because of inflation. “There is a bit of a problem with inflation, but there is more of a problem with stagflation if we don’t get some economic growth,” Monks said. Higher wages would boost domestic demand, which would underpin the economy at a time when exports are bound to fall due to slowdowns in the United States and Britain. (Reuters)