After months of struggling to make ends meet, final month’s funds got here as a aid to Dutch postal employee Richard Huisjing.
The authorities pledged to implement a minimal wage rise of 10 per cent from January to deal with an enormous enhance in the price of residing after Russia’s full-scale invasion of Ukraine led to hovering prices for energy and different commodities.
But Huisjing, who earns simply over the present minimal, fears even this won’t be sufficient to cowl his payments.
“Food prices are getting higher, energy also,” he mentioned. With no dependants, he says he can handle it proper now however is “fearful for the future”.
Since the battle in Ukraine started in late February, prices for cooking staples have soared. A 3-litre bottle of sunflower oil for Huisjing’s deep fryer — an important in most Dutch households for making chips and bitterballen meatballs — has doubled to €10 in a couple of months. His battered bike, his solely technique of transport, will quickly want changing.
The value of residing disaster within the Netherlands, the place inflation hit 17 per cent within the 12 months to September on the again of a surge in power costs, is mirrored throughout Europe. Annually, costs rose by 10 per cent within the eurozone. In the three Baltic states inflation is greater than double that quantity. Wages have been raised for the poorest employees within the 21 EU nations which have minimal wage legal guidelines in place.
This spherical of pay rises just isn’t pleasing everybody, nonetheless, triggering clashes between employees’ teams and companies.
ETUC, the EU-wide confederation of commerce unions, mentioned the actual worth of minimal wages had fallen by about 5 per cent on common — and by virtually 20 per cent in some member states.
“The current crisis is having an even bigger impact than the financial crisis on low wage earners,” mentioned Esther Lynch, ETUC’s deputy basic secretary. “No matter how good you are at household budgets you are not going to be able to make ends meet.”
Tuur Elzinga, chair of Huisjing’s union, FNV, dismissed the funds as a sticking plaster. “Nothing structural is being done to address the fundamental causes of the imbalance in society. We have only gotten richer as a country, but the money remains in limited pockets.”
FNV needs the minimal wage — now between €10.14 and €11.46 relying on what number of hours are labored — to hit €14 an hour.
Businesses imagine that the Dutch authorities is already going too far, too quick. The VNO, the Dutch employers’ physique, mentioned the federal government ought to elevate in-work advantages fairly than pressure hard-pressed corporations to pay extra.
Geert-jan Castelijn, who owns a family-run vogue retailer close to the southern metropolis of Maastricht, mentioned he would wrestle to offer the rise. Although solely a handful of his 25 workers earn the minimal wage, he mentioned he needed to elevate all salaries to take care of variations between pay grades.
Fortunately, final 12 months he mounted his power prices till 2026, however nonetheless needs to scale back consumption. “I want to invest in energy efficiency and in staff development,” mentioned Castelijn. “We cannot raise our prices by 10 per cent. Customers are already putting off purchases.”
The swift wage rise makes it laborious to funds, he mentioned. He has to repay a €224,000 coronavirus emergency mortgage from the state over the following 5 years. “We could have a vicious circle, with inflation and wages going up [together] like we saw in the seventies,” he mentioned.
Economists, together with rate of interest setters on the European Central Bank, have warned that employees should count on a minimize in actual pay to keep away from a “wage-price spiral”, the place inflation stays excessive for years on finish and erodes requirements of residing.
Philip Lane, the ECB’s chief economist, mentioned final month: “In order to get back to lower inflation, we need to realise that corporate profitability will decrease for a while and that wages will not fully keep up with inflation for a while either.”
But officers elsewhere say the labour market’s most poorly paid employees should be pretty compensated.
An EU directive accredited not too long ago requests that they hit a degree of 60 per cent of the gross. The Dutch rise falls barely wanting these figures.
About 25mn employees would have a 20 per cent enhance if member states adopted this, based on Green MEPs.
Stefano Scarpetta, director for employment, labour and social affairs on the OECD, mentioned in September that automated uprating mechanisms in place in nations equivalent to France and Belgium had been “an effective way to preserve the purchasing power of the low-paid”. Scarpetta added that automated or not, it might be “important to adjust statutory minimum wages regularly in the current context of relatively high inflation”.
With the labour market tight, the minimal wage rise just isn’t anticipated to result in companies sacking many employees. The UK’s expertise since 2015 suggests larger pay doesn’t have to come back on the expense of jobs: its minimal wage rose quickly over 5 years to achieve 60 per cent of median earnings, making it one of many highest within the OECD, with none important enhance in joblessness.
Back within the Netherlands, employment is so plentiful that Huisjing has determined to not anticipate the federal government to offer help. He begins a brand new job this month at a DIY retailer that pays €13 an hour. “Politicians always walk behind the problem. They just wait and provide help too late,” he mentioned.
Additional reporting by Delphine Strauss in London
