The Central Bureau of Statistics expects the inflation rate to reach about 2.6 percent in the same period. In the bottom line, this means an improvement of 3.4 percent. Statistics Netherlands indicates that this is the largest real wage increase this century.

The large increase is as noticeable as it can be explained. Due to rising inflation, unions have dramatically increased wage demands in recent months. This tactic also worked. At the same time, inflation has peaked, explains Frank Naughton of the Census Bureau.

The result is that wages rose much faster than prices last quarter, compared to last year. This was different in previous quarters, because inflation was still very high at that time. “It has now decreased somewhat, and employees who are paid under a collective labor agreement are improving,” says Naughton.

Education reached its peak with the new collective labor agreement

“Fixing inflation,” as the CBS economist calls it. Government wages in particular rose sharply by 6.8 percent. Wages rose by 6.1% in companies, and by 5.3% in supported institutions.

Looking across sectors, wages in education rose fastest in July, August and September compared to the same months in 2022. “They have just concluded a new collective labor agreement,” explains Naughton.

The figures also clearly show sectors that have not concluded a new collective labor agreement for a long time, such as the rental and trade sectors. Employment in this sector, which includes housing associations, for example, improved by 2.5 per cent. “That is now being negotiated, so it is also expected to increase significantly,” says Naughton.

He says inflation has not been fixed in almost all collective labor agreements. This is especially true for collective labor agreements concluded for a longer period. This may happen yet.

New collective labor agreement negotiations

Compensating for the complete loss of purchasing power caused by high inflation may not be possible, according to Naughton. It is estimated that the 6 percent wage increase in the latest quarter does not yet match average annual inflation of about 10 percent.

Naughton expects wages to rise less quickly in collective labor agreements where inflation has already been “fixed”. After all, employers will use this as an argument in new collective labor agreements.

Naughton points out that there are more things at play in these negotiations. “If there is a tight job market in your field, you as an employee still have a stick to beat,” he adds.