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Automatic Price Compensation: Ensuring Fair Wages and Inflation Stability in Collective Labor Agreements

In virtually all collective labor agreements (CAOs), unions and employers negotiate wage increases every few years for months. And if it gets stuck, the unions don’t hesitate to use the strike weapon. For example, the work was recently stopped at Albert Heijn, FrieslandCampina and Nedcar, among others, after which an agreement was concluded.

Elzinga: “We now have to fight for the same tenner every year and then we are accused of being responsible for a fighting economy. We are done with that.”

Profits

It is much easier if wages automatically rise in line with inflation, he believes. Then there is less negotiating. “Most employers can do without it. The companies are in good economic shape. Of course there are always employers who are really struggling. In that case, in special cases, you can make separate agreements.”

Automatic price compensation must be enforced by collective agreement. After that, wages will increase in line with inflation. If, for example, it is ten percent over the measured period, the salaries will also increase by ten percent. However, employers’ organization VNO-NCW fears that this will create a wage-price spiral.

Due to the higher wages, the products and services that the companies make are also becoming more expensive. This in turn causes inflation and so wages will rise even further a year later. “There are enormous risks involved,” said the spokesperson for the employers’ association.

Not afraid of spiral

Elzinga: “In Belgium and Luxembourg you already have automatic price compensation and inflation there is not much higher than in the Netherlands. So I’m not afraid of such a spiral. If you make these kinds of agreements with employers, you can have a much more relaxed conversation. What is needed to bring in personnel in the tight labor market? Then you may agree that wages should rise even further than just inflation. But then there is already a basis.”

Elzinga’s call is remarkable. After all, it was at the request of the unions that the APC disappeared a few decades ago in exchange for regular wage increases. In the port of Rotterdam, the apc did survive. Wages there rose by almost 17 percent this year.

Big hole

The provision was deleted in all other collective labor agreements. Inflation was low at the time, so there was hardly any wage increase, trade unionist Niek Stam explained earlier.

Elzinga: “I don’t know off the top of my head whether that APC provision was scrapped at our request. But yes, the consequence of my proposal is that wages hardly rise at low inflation and even fall at negative inflation. Accept that consequence. me, but for now it is not an issue. We still have a big gap from last year to repair.”

If the employers do not agree with the APC, he threatens actions such as strikes. “It is only fair that we can also pass on our increased costs as employees. Otherwise we will no longer be able to pay the baker and we will all have to go to the bargain corner. It is certainly not normal that our wages every year lower due to inflation.

2023-07-31 12:34:22
#FNV #wages #linked #inflation #collective #labor #agreements

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