The streets of Brighton, a city in Great Britain with a population as large as Ploieşti, were filled with garbage because the garbage collectors went on strike, demanding higher salaries, informs Mediafax.

Metallurgists in South Africa ended a union action after earning a 6% pay rise. Tens of thousands of workers have stopped working at tractor factory maker John Deere’s three American states to demand more money. From one end of the world to the other, the higher cost of living after the pandemic is felt, and employees want higher wages to help them keep up with inflation.

The trend does not shy away from Europe either, where employees are also encouraged by labor shortages, and strikes and trade union demands, especially in Germany, can become a problem for the European Central Bank (ECB). In the EU’s largest economy, around 3.5 million public sector employees, including the state banking sector, are trying to get significantly higher pay. And in the talks in Berlin for the formation of a governmental coalition, the increase of the minimum wage in the economy is taken into account without an independent commission specially created for consultations on this issue having a say. From the first signs that an wave of inflation is coming, the ECB has assured that it will be temporary because it is caused by transient factors, such as supply chain disruptions. But inflation persists and higher wages, required for revenues to keep pace with price increases, could further fuel inflation and force the eurozone central bank to act.

one way or another. This could mean higher interest rates – the main instrument for easing inflation – and weaker economic growth – the negative effect of rising interest rates – or the withdrawal of stimulus programs through government debt acquisitions.

The ECB has so far preferred to wait and give assurances that it is in control of the situation. On the other hand, the surge in inflation could also be seen as a victory for central banks, which for years have tried unsuccessfully to revive inflation and bring it to the 2% target.

With consumer prices rising by more than 4% annually, a new round of negotiations on November 1 for public employees ‘salaries in Germany will make it clearer whether employees’ bargaining power has increased in the post-pandemic environment in the heart of the eurozone. Evidence so far shows that the balance is tilting towards employees, writes Bloomberg.

In Germany, talks by public sector employees are led by the Verdi union, the second largest. It seeks to achieve 5% salary increases for civil servants. Any agreement can be imitated by the entire public sector.

Separate negotiations, such as those in the state of Hesse, suggest only a partial victory, with wage increases halved from those required. “It would be even unusual to get an agreement for 5% salary increases

in an environment where the labor market has reserve capacity, “says Jari Stehn, chief economist at Goldman Sachs. “This happens when the labor market is short of workers, which is not the case now.”

In the euro area, the inflation rate probably reached 3.7% in October. But for Germany, the central bank, the Bundesbank, estimates 5% inflation at the end of the year, which is as much as Verdi demands in addition to wages to prevent inflation from eroding purchasing power. Employers are determined to hold on to positions, but so are union leaders. “Colleagues in the public sector have kept the country moving,” said President Verdi, Frank Werneke.

Some experts, such as the consulting firm in HR Kienbaum, anticipate that salaries will increase by an average of 3% next year. And the minimum wage in the economy, introduced in Germany only in 2015, will be increased by 25%. What public sector employees accept can become a benchmark for other sectors. The IGC’s ECB union, which represents 600,000 employees in mining, chemistry and energy, will present its demands next month. And in some sectors the workforce is no longer so easy to find. In fact, the shortage of employees is one of the reasons why employers are asking the government to facilitate immigrants’ access to the labor market. Labor shortages are even more acute in labor-exporting countries, such as those in Eastern Europe.

There is concern in Germany that rising inflationary pressures could unleash an inflationary spiral such as the 1970s, when the central bank was forced to raise interest rates, cutting stock market momentum and leading to rising unemployment, according to the Financial Times. The IMF warned that central banks must be “very, very careful” that energy prices and other costs do not turn into higher wages and prices. Others, however, see in the growing trend a welcome boost given to the more stagnant wages in the West. But what is happening in the eurozone is echoing in the east as well. “Human capital has simply become a little more expensive,” Carsten Brzeski, chief economist at ING, told FT. He believes that as baby boomers retire and companies reconfigure their supply chains closer to home, wage pressures that accumulated before the pandemic will only increase.

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