How Scholz Wants To Fight Inflation

DEmployers and trade union leaders have been informed in advance of the Chancellor’s “united action” plan against rising inflationary threats and are not rejecting it. Olaf Scholz (SPD), however, did not receive a public invitation to them during the budget debate in the Bundestag: there are concerns, especially on the trade union side, that such a round of talks between politicians and social partners could ultimately limit the specifications of their wage policy. According to Scholz’s analysis, wage policy plays an important role in determining whether high inflation will persist in Germany or not.

Heike Goebel

Editor responsible for economic policy, responsible for the “Order of the Economy”.

“The aim of the joint action must be to reduce the current burden on households and the economy and to develop a more resilient and sustainable economy,” said President of the German Trade Union Confederation (DGB), Yasmin Fahimi, at the request. “But it is also clear that collective bargaining is not conducted in the Chancellery.” Large individual trade unions such as IG Metall, which is currently waging a collective dispute in the steel industry and is preparing for a collective bargaining round for nearly 4 million workers in the metal and electrical industries, but wanted pressure from the chancellor, did not specifically comment on Wednesday.

limited enthusiasm

In principle, however, according to Fahimi, he welcomes the proposal to “discuss the current challenges in the coordinated action of employers, trade unions and politicians”. Employer President Rainer Dulger reacted almost identically – without going into the details of the content. Both emphasized social partnership as the main force behind constructive solutions.

The term “concert action” refers to the historical format of 1967. At that time, the first grand coalition of the Union and the SPD established such a dialogue alliance on the initiative of Economy Minister Karl Schiller (SPD) in order to achieve stabilizing coordination between financial, monetary and wage policies in a macroeconomic situation similar to today’s. But it was not destined to be a lasting success.

Scholz now has similar considerations: he explained that the price increase was still due to one-off “shocks” such as the war in Ukraine and supply bottlenecks. “But we have to be careful that this does not lead to sustained development with high inflation rates.” It is clear: “Long-term loan-financed grants are not an option.” This is all the more so as the traffic light from 2023 wants to re-apply the debt brake anchored in the Basic Law.

The Scholz analysis also expresses concern that the continued cushioning of the effects of the crisis and inflation on citizens and businesses with government bailouts could eventually become an inflation engine, as could the large Corona stimulus package in the United States. In his speech, Scholz directly referred not only to high energy prices, but also to wage policy as a possible factor in increasing inflation – and in particular praised the latest agreement in the chemical industry, as it was based primarily on the so-called high permanent wage increases.

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