A survey by the Dutch Central Bank shows that the Dutch are not massively spending the money they saved during the corona crisis. And we are finally seeing wage increases in collective labour agreements. This and more is discussed by Casper de Vries, Professor of Monetary Economics at Erasmus School of Economics, on Dutch radio station BNR Nieuwsradio.
Not evenly distributed
The corona crisis allowed people to increase their savings, but this money is mainly staying in the bank. However, not everyone has been able to save. Especially people with a higher income and a permanent job have saved. They could not, for instance, go to a restaurant or on holiday. People with a lower income have often not been able to save or have even lost part of their savings. This mainly concerns people with a flexible job who experience more uncertainty about their employment status. Most of the self-employed have also lost money during the corona crisis. The extra savings are therefore certainly not equally distributed.
More than half of the Dutch who saved during the crisis left their money in the bank. Still, it is a good thing we are not spending it all, as this could potentially lead to inflation and perhaps even higher wages.
Large differences
And we are already seeing wage increases in the new collective labour agreements. A study shows that the collective agreements concluded so far show wage increases of up to 4%. This was to be expected since unemployment is back at pre-crisis levels, while wages are not. Still, it varies a lot per sector, says de Vries. ‘In one sector we see a screaming shortage and in another sector we are not really seeing a shortage. That is why this wage increase is not yet widespread.’ It is the sectors that have been hit hardest by the crisis that are not yet showing wage increases.
Not only positive news
However, wage growth is not all positive. ‘If inflation is incorporated into wages and indexed, then we have a problem,' says de Vries. ‘But I think that, certainly in the European economy, wage growth is not yet so strong that inflation will become inevitable.’
‘The wage pressure we have had over the past 20 years is simply due to globalisation and the enormous competition from China,' says de Vries. ‘The moment you start increasing wages, you lose competitiveness. But China is slowly starting to have problems; more and more people are retiring there. But it is a slow process.’
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The full item from BNR Nieuwsradio, 30 August 2021, can be found here (in Dutch).Â