Additional salaries of around 10 percent for police officers and teachers, 9 percent for youth workers, 8 to 12 percent for catering workers and even around 33 percent for baggage handlers at Schiphol. There have been regular double-digit wage increases in recent months.
Unions believe income growth is urgently needed to offset the “excessive” inflation of recent years, but employers now believe it is a good thing. Major employer associations VNO-NCW, MKB-Nederland and AWVN describe the increases as unsustainable. “Agreeing on such percentages on autopilot is irresponsible in the long run,” says VNO-NCW’s Alfred van Delft.
“The economic situation is bad”
Economist Mathijs Bouman says workers have put forward the strongest arguments in recent collective agreements. “They managed to justify their wage demands by citing rising inflation and losses in purchasing power. “Due to staff shortages, employers also had to listen.”
With a tight labor market, expensive food, and high energy bills, workers had powerful bargaining weapons. The result: the fastest wage increases in the century, even when adjusted for inflation. According to the statistical agency CBS, real wage growth in November was 4.4 percent.
Prices are still rising, but much slower than in 2022, and now slower than wages:
According to employer associations, such a situation can no longer be the case. Now they put forward a new set of arguments: Companies are also suffering from cost increases and the number of bankruptcies will increase this year. “The economic situation is getting a little worse, so we need to work on the profitability of companies,” says Van Delft.
Break a profit record
This “dark tide” follows years of several bankruptcies and high corporate profits, in part because companies took advantage of price increases for their products. Profits at Shell, Unilever and Heineken reached record levels in some cases.
But according to employer associations, most companies are no longer talking about money. “This is a largely outdated image,” Van Delft says. “Take a broad look at medium-sized businesses, retail sales and the Corona debt situation. Inflation related to the Ukrainian war also took the fat off the bones of many companies.”
The employers are right, and Bouman agrees. “The economy has been shrinking for three consecutive quarters. The economic environment is no longer suitable for companies. In this regard, it is not surprising that they bring bankruptcies, inflation and the decline in the sector into the wage bargaining game. For example, catering businesses are as affected by more expensive products and high energy prices as consumers.
loss of wealth
A return to strong economic growth seems unlikely for now, as high energy prices will continue to put pressure on the incomes of citizens and companies for a long time. Bouman: “It is inevitable that society will have to accept the loss of welfare. Someone has to digest this: citizens, government or corporations.”
One example of this “consumption” was the energy cap: the state subsidized part of the population’s energy costs. “The costs are thus passed on to subsequent generations, who will eventually have to pay the debt,” says Bouman.
Companies also contribute by paying more salaries to their employees. “As a result, their profitability is now under pressure,” says Bouman.
Is the minimum wage higher?
Employers’ associations believe society is too willing to expect companies to pay for cost increases. Van Delft: “Unions rely heavily on this principle when bargaining for wages: Inflation needs to be balanced one to one and this should be regulated by collective agreements. “We don’t think this is justified.”
VNO-NCW wants the government to cover more costs by reducing labor taxes. Van Delft says, “After all, the job should pay more; “It would be nice if citizens kept more of their gross wages,” he says.
Many political parties are now demanding higher minimum wages, which will cost employers more. Bouman: “Employers will then have to increase the wages of the entire bottom half of their employees. “As a result, we want to continue to encourage our employees to pursue careers within the company to keep them at the company.”
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
