September 25, 2022

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The slight rise in wages can't keep up with the massive inflation right now

The slight rise in wages can’t keep up with the massive inflation right now

Workers are still dealing with spiraling inflation. Grocery stores in particular are more expensive and energy bills are on the rise. Meanwhile, wages are significantly delayed, causing many people to lose their purchasing power. So far, there has been no question about a possible wage wave and wages will rise further in the coming months, according to a tour on NU.nl.

Our country’s inflation rate rose to 12 percent in August, from 10.3 percent the previous month, according to figures from the Netherlands Statistics Office. Rising energy bills in particular have led to higher inflation. Clothes and food also became more expensive.

Meanwhile, wages are far behind. The average wage increase last month was about 4 percent, according to preliminary figures from the Employers Association AWVN. “But there is no question of a wave in wages,” says a company spokesperson. “There are many companies, especially small and medium-sized companies, that cannot correct inflation with a large wage increase. These companies cannot afford that.”

On top of that, there are a lot of uncertainties, AWVN says. “Developments abroad, such as the war in Ukraine, supply lines from China and shutdowns. They could all affect wage agreements in the coming months.”

Economists from RaboResearch expect wages to continue rising slowly in the coming period, to around 5% next year. “Significant wage increases can be seen in certain sectors, such as mechanical engineering and industry. There are companies that can afford them. But many small and medium businesses do not have that space,” says economist Hugo Erkin.

Wages will rise faster if inflation remains high

The Dutch security industry announced last week that security officers can count on a 15 per cent salary increase next year. “This is a very big deal, but the industry is very understaffed and wants to keep staff that way,” an AWVN spokesperson says.

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According to Collective Labor Agreement expert Henk Strating of the Internet’s Collective Labor Agreement expert, wages in various sectors will rise faster than before if inflation remains high. “Many sectors, for example those where there is a staff shortage and wages are relatively low, will follow security guards. For example, think of the food industry. They will do everything they can to attract people.”

The FNV union comes the day before Prinsjesdag with a huge demand for wages for the upcoming CLA season. A spokesperson says: “The vast majority of businesses are making big profits and it’s time for employees to cash in. They’re saving purchasing power now that groceries and energy are more expensive. It’s time for big compensation.”