Germany’s Bundesbank, Europe’s largest central bank, has backed a call for higher wages to boost the flat-lining Eurozone economy. Jens Ulbrich, the bank’s chief economist, has joined a growing list of key players calling for widespread pay rises to fend off the crippling effects of failed austerity and low inflation and to crawl back the falling wage share in national wealth. Ulbrich told Der Spiegel that recently agreed pay rises of more than 3 per cent were welcome and that recent wage trends were ‘moderate’ given Germany’s relative economic strength and low unemployment. Germany’s average worker’s wage has hardly risen over the last decade, similar to the UK and USA. Philip Jennings, the general secretary of the global trade union federation, Union Network International, which covers service, financial, media, communications and graphical workers unions first issued a call for worldwide higher wages at the World Economic Forum in Davos in 2013 with his phrase: “The world needs a pay rise.” In a letter to the Financial Times, Jennings said: “The Bundesbank has joined a growing list of the great and the good calling for a pay rise for workers. All of these institutions and leaders, from the Pope to President Obama to the CBI and now the Bundesbank recognise that if employees’ pockets are empty they are not in a position to spend to pick up the economy. It is time for the Federal Reserve, the Bank of England and the European Central Bank to heed this message. “The world needs a pay rise if we want to see our way out of the shadow of the crisis and into the light of global growth. After all, the CEOs can take care of themselves, with their pay rises topping 15 per cent.” The groundswell of support for higher wages follows a raft of recent reports pinpointing economic inequality as a key threat to the global economy. The OECD has released its predictions for the world economy until 2060. These are that growth will slow to around two-thirds its current rate; that inequality will increase massively. A recent IMF study concluded that inequality is damaging to economic growth. The report also dismissed outdated ideas that redistributing wealth could make matters worse.
Posted on: Sun, 03 Aug 2014 16:45:01 +0000
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