The recently negotiated increase in wages and salaries for employees in the metalworking industry can be seen as a considerable success for the union. An increase of 3.55 percent is impressive. It remains to be seen which – possibly negative – employment effect will come from the high degree. In any case, a pay increase that is well above the long-term average is easy to justify – given the current sharp rise in monetary devaluation. Workers rightly demand compensation for their loss of purchasing power.
This deal will undoubtedly send out a signal to other industries. At the time these lines are being written, for example, there is a haggling over the wage increase in retail. Here, too, a stronger increase is to be expected than in previous years. The fact that purchasing power losses, which are due to the inflationary monetary policy of the ECB, are offset by high wage agreements, will, however, drive general inflation even further. Nobody else than the tax authorities can be happy about that – more on that later.
What should not be overlooked, despite all the cheers about rising wages and salaries, is the fact that collective decisions also have different effects for different companies. A high wage settlement, which company A can easily cope with, can put company B in trouble. It would therefore be more in line with business reality to negotiate wages at company level and not across the industry. This would on the one hand increase the importance of the works councils and on the other hand curb the arrogance of the unions. But because that is so, the latter will fight this economically expedient idea with all their might – and in the end successfully.
What is easily overlooked: The finance minister and social security are invisible participants in every salary negotiation. The main beneficiaries of every wage increase are unfortunately not the employees. Rather, it is the state. The liberal think tank Agenda Austria has calculated the consequences of the recent metalworking degree: On average, everyone is allowed to participate Workers in the industry about a net wage increase of 70 euros per month. The state, however, collects an additional 100 euros. The gain for the tax authorities is 43 percent higher than that for the employee. Both Employees If the disproportion is even more glaring: You can expect a salary bonus of 95 euros, while the state earns 144 euros (!) – that’s a full 52 percent more.
It doesn’t take rocket science to realize that what counts for employers is not the net amounts flowing to their employees, but the gross wages, which are an essential (in some industries even the decisive) cost factor in company calculations. However, as the example of the metalworkers shows, the sharp rise in wage costs caused by high qualifications is currently only 41 percent (for blue-collar workers) and 40 percent (for white-collar workers). Big Brother collects the lion’s share.
It is therefore not without good reason that for years – not only employers – have been calling for an end to the “cold progression” that makes the greatest contribution to the problem outlined above. As long as every wage increase automatically means a step further into a higher tax bracket, not only does a large part of its effect on the employees fizzle out, but it also burdens employers with avoidable extra costs.
It is therefore high time to valorise the tariff levels based on the amount of currency devaluation. The fact that the finance minister rubs his hands in the face of the free basket money that every wage round brings him is anything but a reason to be happy.