This one is just too funny to pass by: having watched as their incompetent and clueless “leaders” sparked the biggest surge in European inflation since Weimar, crushing the purchasing power of ordinary people across the continent, it is only when their own purchases were suddenly threatened that the ECB’s rank and file decided to make some noises.
According to the FT, workers at the world’s biggest hedge fund (or at least it was until the Euro hit parity), known as the European Central Bank, will discuss protest action and even potential strikes after rejecting a pay offer well below the rate of eurozone inflation, a union official has warned.
The ECB’s proposal to increase pay by “only” 4.07% in January is – hilariously enough – consistent with the bank’s own opposition to deals that link wages to inflation that it believes risk fuelling a damaging wage-price spiral. There is just one problem: its own employees think Christine Lagarde – herself a multimillionaire who barely avoided jail time despite being a convicted felon – is full of it and demand much higher pay… which if extended to all European workers will result without doubt in a wage-price spiral, as higher wages will mean higher prices, which mean even higher wages, and so on.
The ECB’s latest pay offer, up from a 1.48% rise at the start of this year, is less than half what annual eurozone inflation is expected to be this year and will leave its staff with a significant pay cut in real terms (don’t tell them, but most Europeans won’t even get a 4.07% nominal wage increase: are they supposed to strike too).
“People are losing faith in this institution,” said Carlos Bowles, vice-president of the Ipso union that represents ECB staff.
“What the ECB leadership is telling us is ‘sorry we missed our own inflation target and now you, the staff, are going to pay the price’.
“We really see an issue in the way the ECB stance is damaging the bargaining power of workers,” said Bowles.
“This is playing a role in increasing inequality.”
Of course, that’s what we have been saying since 2009. But it was only when their own livelihood was on the line, did workers for Europe’s money printer figure it out too.
A recent survey by the union found “the vast majority of colleagues are angry” about the ECB’s pay offer, he said. “The pay consultation is due to finish at the end of the year and we will decide in January if we protest.”
The union reportedly met with the ECB’s ultra wealthy president Christine Lagarde – who doesn’t care what food costs, after all with the help of Bernard Tapie she embezzled enough to last her a lifetime – a few weeks ago and she made it clear there was no room for negotiation, he said. A strike, as happened at the ECB over pension reforms in 2009, was “not excluded” but it would only “come after an escalation curve”.
Unfortunately for the ECB there is unpleasant precedent: staff at the Brazilian central bank went on strike earlier this year in protest over pay. But strikes are difficult to organise at the ECB because it is not subject to any national law and operates under its own rules, including a “minimum service obligation” for staff, which is decided on a case-by-case basis.
The dispute puts the ECB in a difficult position as it prepares to raise interest rates for the fourth consecutive time at its meeting next week to try to tame the biggest surge in inflation for a generation. Will it wait until it discovers that rate hikes have no impact on Russian commodity supplies or will it just go ahead and keep hiking wages?
“It’s awkward, to say the least,” said Erik Nielsen, chief economics adviser at Italian bank UniCredit, adding that it put the ECB in “between a rock and a hard place” as it tried to fight inflation and keep its staff from turning against it. “The symbolism is just awful.”
The ECB said it has “a regular, yearly salary review . . . which follows a predefined methodology” and “reflects the wage dynamics of comparator institutions,” including the 19 euro area national central banks, the European Commission, the European Investment Bank and the Bank for International Settlements. “It applies to all staff,” it said; the only problem is that some of the ECB’s staff – those who wine and dine every other month at the BIS tower in Basel – are so rich they don’t care what their wage dynamics are. It is everyone else that is finally calling out the ECB for its BS.
Eurozone inflation hit double digits in October for the first time in the 23-year history of the single currency after Russia’s invasion of Ukraine caused a surge in energy and food prices. In November, eurozone inflation dipped for the first time in 17 months to 10 per cent, which is still five times higher than the ECB’s target. Over the whole of this year, the ECB has predicted inflation will be 8.1 per cent and it is likely to lift this forecast further next week.
Wages in the single currency bloc have not kept pace with inflation, eating into the spending power of households and prompting economists to predict a recession this winter. Hourly labor costs in the eurozone rose 4 per cent in the year to the second quarter, according to Eurostat, the EU’s statistics agency.