Data on the conclusion of new collective labor agreements indicate that wage growth is slowing. According to the contracts concluded in July, the increase in wages was 7,9%, and the contracts concluded now provide for an increase in wages by 7,2%, which indicates a trend: unlimited wage growth is decreasing. At first glance, this is unprofitable for workers, but economists see this fact as a reason for optimism. What is the reason for such optimism? Find out about this on our website.
Curbing the inflationary spiral
An economic model in which wages are raised because prices rise, and prices rise because people have more money in their hands, leads to rampant inflation. According to this scheme, for example, inflation developed in Germany after the First World War: then salaries were paid twice a day, and workers were given time to make purchases, because money depreciated at an incredible speed. It is clear that it was impossible to talk about any savings.
Do the Dutch want this scenario to develop? Of course not. Moreover, such processes can lead to deflation - a phenomenon in which prices fall due to the fact that consumers postpone purchases, expecting an even greater fall in prices. As a result, the cost of goods and services increases, and selling prices fall. In this situation, enterprises begin to close en masse.
That's why economists are happy about the slowdown in wage growth. It is gratifying that trade unions understand the risks and are reducing their demands.
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