Wages still increasing, but well below inflation

The wage increases employers and trade unions set down in collective labor agreements were again relatively high last month. But they were still out of proportion with inflation, which was above 10 percent for the first time since 1975 in July.

According to figures from AWVN, the most important advisor to Dutch employers in employment conditions, unions and employers concluded 18 collective labor agreements in July. The average wage increase was 3.5 percent.

That is less than the 4.1 percent average increase in June. Due to several late notifications of collective labor agreements, the AWVN adjusted June’s monthly average upward. As a result, June became the month with the highest wage increase this century.

According to AWVN, there are several reasons why wage increases are currently so high. Employers feel a kind of social pressure to limit employees’ loss of purchasing power. There is also a shortage in the labor market, causing wages to rise.

But the wage increases are dwarfed by the rate at which prices have been rising lately. Statistics Netherlands previously reported that consumer goods and services were 10.3 percent more expensive in July than in the same month last year. Skyrocketing energy prices, partly due to the war in Ukraine, were the main culprit behind the high inflation.