Finance

Collectively negotiated wages rose less rapidly than prices last year

In the first half of 2021, wages rose by 2.2 percent, in the second half by 1.9 percent, reports the Central Bureau of Statistics (CBS).

Preliminary figures

These are provisional figures, but the chance that they will change enormously, says Frank Notten, economist of the statistical office, not so great. He mentions the figures for 2020 as an example. Initially, an increase of 3 percent was assumed, which eventually became 2.9 percent.

Assuming that not much has changed in December, this means that collectively agreed wages have risen less rapidly than inflation. In the first eleven months of 2021, this amounted to 2.4 percent compared to the same period in 2020, reports the Central Bureau of Statistics. The final annual figure will be announced next Tuesday.

Sky-high inflation

The high inflation is mainly caused by high energy prices, something that pushed up the cost of living considerably, especially in the last months of 2021. In November inflation peaked at 5.2 percent, the largest increase in nearly 40 years.

In this video, Carien ten Have explains how it is possible that everything has become more expensive:

Since energy prices were still very high in December, inflation is expected to be very high as well.

Ingredient Negotiations

And that is precisely one of the most important ingredients for collective bargaining, explains Notten. And with that, it is also one of the explanations that collectively negotiated wages rose less rapidly in 2021 than in 2020.

In that year inflation was much lower than in previous months. “There was therefore little reason to demand a large increase,” says Notten. That was also the case at the beginning of last year. “And then it was not too bad with the shortage on the labor market.”

Lockdown and curfew

And where the average wage increase in 2020 received a major boost from the smoothly running economy in the first months of the year – when corona was still a vague flu from China – the Netherlands was almost completely flat last year due to the lockdown and curfew. Not a good time to negotiate a substantial wage increase, explains Notten.

The catering collective labor agreement shows how the timing of the negotiations can have a major impact on the result. At the end of 2020, it was agreed to use the zero line: not a cent extra. “If it had been closed in April last year, there might have been a wage increase,” says Notten. “When the lockdown was over, the catering industry was short of hands.”

Will inflation stay that high?

According to Notten, the high inflation could very well ensure that unions manage to achieve higher wage increases at the negotiating tables this year. “But will it stay that high, we don’t know yet,” he adds.

In addition, other issues also play a role in the negotiations, such as the power of the trade unions. “It is less and less, because they have fewer members.” In addition, of course, it also depends on how well things are going in a certain industry, concludes the economist.

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