TIROLER TAGESZEITUNG "Editorial" edition of Thursday, June 29, 2023, by Max Strozzi: "Inflation came before wages"

2023-06-28 22:11:32

Innsbruck (OTS) – The fact that the Minister of Finance is telling people that their wages are partly to blame for extremely high prices has not only been refuted by experts, but is also outrageous because he is passing on his own mistakes in fighting inflation to the citizens.

You have to trust yourself. Finance Minister Magnus Brunner (ÖVP) announced that higher wages are partly to blame for the above-average inflation in Austria. Doing something like this to people who are plagued by inflation is at least clumsy, rather bold.
First of all, inflation forms the basis of wage negotiations in Austria. As a rule, the higher the inflation beforehand, the higher the later wages. Without high inflation there is also no high increase in wages. It is clear that companies then pass on some of the higher costs in the form of higher prices and that the competitiveness of some companies also suffers. In the beginning, however, there was inflation, not wages.
Secondly, the economic research institute also recently established that the higher wage agreements are not to blame for the above-average inflation in Austria. Wifo boss Felbermayr emphasized again yesterday that the wage-price spiral alleged by Brunner did not exist last year and does not exist this year either.
Thirdly, a Wifo analysis showed that the above-average inflation in Austria is mainly the result of the federal government’s expansive fiscal policy. In other words, the multi-billion dollar watering can grants from the black-green federal government, which were distributed indiscriminately to rich and poor, have further fueled inflation. Instead of supporting the needy in a targeted manner, everyone with a fat bank account was given a lot of tax money. These were not anti-inflation aids, but inflation fuel. Despite all the warnings and criticism from economic researchers, this cornucopia policy was adhered to and taxpayers’ money continued to be diligently pumped into the system.
Fourth, and Wifo also states that, in contrast to other euro countries, Austria has “not taken any substantial measures to reduce price pressure”, for example in the case of energy prices. Once energy is (extremely) expensive, all other prices rise as a result. All major energy companies – from the Verbund to the state suppliers – belong to the public sector. Instead of positioning their own electricity and gas companies as a firewall against inflation, record profits are made and special dividends are creamed off, some of which are then redistributed to the people, which drives the spiral further (see third).
Austria has done a lot of symptom treatment and little fight against the causes. Now telling employees with flowers that their wages and salaries are partly to blame for the expensive life is not just cynical. In doing so, Brunner is passing on the mistakes of his own government to the citizens.