Brussels, 23/06/2004
The ECB is appealing through the media to social partners to avoid inflationary second-round effects from higher oil prices.' However it is not only wage formation but also monetary policy that needs to react appropriately ‘, says John Monks, General Secretary of the ETUC.
Fears that higher oil prices will feed into wage developments are grossly exaggerated. Recent Commission statistics show a sharp deceleration of wage growth. Against the background of substantial economic slack, the 2004 bargaining round has settled for moderate wage outcomes that underpin wage developments compatible with price stability into 2005. This allows the ECB to focus on the negative demand side effect of the oil price increase. There is indeed a real danger that an erosion of purchasing power of wages would result in another year of weak economic growth.
The ETUC calls upon the ECB to enter into a constructive dialogue with the European social partners in order to ensure a macro economic policy mix that secures price stability while allowing the still vulnerable recovery to take hold.