German Scholz seeks broad alliance to curb inflation | Economic news
BERLIN (AP) — German Chancellor Olaf Scholz said Wednesday he wants to join employers and unions in “concerted action” to find ways to cushion the effects of rising prices while preventing an inflationary spiral in Europe’s largest economy.
Germany, like other countries in Europe and beyond, has already seen inflation rise sharply since Russia’s invasion of Ukraine drove up fuel and food prices. . An official estimate this week showed the country’s annual inflation rate jumped to 7.9% in May, the highest rate since the winter of 1973-74.
“These price increases are probably still due to one-off shocks, but we have to be careful that this does not turn into a long-term development with excessive inflation rates,” Scholz told the German parliament.
He said debt-financed government aid was not a long-term solution, especially as Germany aims next year to honor a rule limiting its government borrowing after it was suspended during the coronavirus pandemic. coronavirus.
In Germany, wage agreements are usually reached in negotiations between employers’ organizations and trade unions that cover an entire industrial sector.
Scholz called a recent deal in the chemical industry a “very interesting” solution. Employers and worker representatives have agreed on a one-off payment of 1,400 euros ($1,500) per employee to help counter rising prices. But they also postponed talks on a formal pay rise until October, hoping the economic outlook will be brighter by then.
Scholz said the government planned to call on employers, unions and worker representatives to join the government in “concerted action against price pressure”. The proposal echoes a similar effort in 1967 to counter West Germany’s first economic crisis.
“Everyone will have to bring something” to deal with the current situation, said the Chancellor.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.