Trade unions still pushing for high increases in wage negotiations

Trade unions are also pushing for significant wage increases in collective labor negotiations this year, even though inflation has dropped significantly. According to the trade unions, workers’ purchasing power has not yet recovered from the energy crisis on top of the coronavirus crisis. Employers and economists like DNB president Klaas Knot worry that the high increases will cause a wage-price spiral.

Last year, trade union FNV announced that it would aim for pay rises of 5 to 14 percent this year. Recently concluded collective bargaining agreements reflect this, NOS reports. AkzoNobel agreed to a 10 percent increase, and the carpentry industry got 9.5 percent. The collective bargaining negotiations for the cleaning industry start today. The current collective labor agreement included a wage increase of 19 percent. CNV wants another 14 percent in the new one, spread over two years.

According to the employers’ association AWVN, which covers 750 companies and industries and is involved in over half of all collective labor agreements, the collective agreements in the first months of 2024 include an average wage increase of 6.3 percent. The average wage increase in 2023 was 7.3 percent.

Back before the massive inflation sparked by Russia invading Ukraine in February 2022, wage increases were typically between 1 and 3 percent, according to the broadcaster. After peaking at 14.5 percent in September 2022, inflation has now dropped to 2.8 percent in February 2024. Economists expect it to hit the EU-ideal of 2 percent in the coming year.

President Klaas Knot of De Nederlandsche Bank has repeatedly warned that high wage increases will only result in higher inflation - people have more to spend, so prices increase. He said he understands the trade unions want to protect their members’ purchasing power, but it could result in a wage-price spiral.

Entrepreneurs are also not thrilled. Higher wages help attract and retain staff, but not every entrepreneur can bear 10 percent high wage costs. “Our customers have already been confronted with significant indexation of contracts and that was fine for once, but no longer,” Pieter Grootjes of cleaning company Victoria told NOS. “The customer’s budget does not grow with our labor costs, so cleaning becomes less frequent and less long, and that costs us work and people.”