The National Institute of Statistics and Economic Studies (STATEC) warns that if inflation keeps increasing, there is a risk that multiple wage indexations will be postponed.
The war in Ukraine and the strict Covid-19 measures in China have led to rising prices and caused supply chain bottlenecks. In April, the annual inflation rate was 7%. Regarding oil prices, the Institute currently expects a price increase of 39% for 2022. Inflation remains high and the wage indexation initially expected for August 2022 could already be triggered in June, according to STATEC. In any case, it will not be paid out, as the tripartite agreement stipulates that there will not be multiple wage indexations within a single year until the end of 2023. STATEC’s latest calculations also suggest that it is increasingly likely that another wage indexation will be triggered before April 2023. If inflation keeps increasing longer than expected, there is a risk that multiple wage indexations will be postponed. In this context, Minister of the Economy Franz Fayot assured during a press conference on Wednesday that “no wage indexation will be cancelled”.
If more than one wage indexation has to be postponed within a single year, then all of the postponed indexations will have to paid out at the same time after the tripartite agreement expires. How this will work or whether there will be additional adjustments will be up to the next government – after the legislative elections in October 2023 – to decide, according to Fayot. The Minister also pointed out that the tripartite agreement stipulates that new negotiations between the state, employers, and the trade unions should be held if the situation worsens.
When asked about the demand by the Christian Social People’s Party (CSV) to adjust the tax tables for inflation and potentially introduce a higher maximum tax rate, Fayot stated that this will be discussed during the debate on tax reform in the Chamber of Deputies.