GERMAN Chancellor Olaf Scholz is preparing Germany's citizens for further price increases. “The current crisis will not be over in a few months,” said the Social Democratic politician (SPD) at the start of the so-called “concerted action” with top representatives of employers and trade unions at the chancellery, writes Deutsche Welle.

Russia's war in Ukraine and disrupted supply chains due to the coronavirus pandemic have created general uncertainty. “We must prepare for the fact that this situation will not change in the foreseeable future,” Scholz said. Germany is facing a “historic challenge”.

The goal of this first in a series of meetings is to find instruments to curb rising prices. The results will not be known until autumn. “As a country, we will get through this crisis well only if we join forces, if together, hand in hand, we find solutions,” Scholz emphasized. “Society is much stronger than is sometimes assumed. The message that is important to me is that we must stick together,” said the chancellor.

President of the Employers' Association: Difficult years lie ahead

The president of the Employers' Association, Rainer Dulger, also sees dark clouds on the horizon. “The country is facing the most difficult economic and socio-political crisis since reunification.” It can only be overcome through joint efforts. Constant economic growth, such as existed before the pandemic and the start of the war in Ukraine, “is no longer something that can be taken for granted.” “Difficult years lie ahead,” Dulger warns.

As one of the possible solutions, Dulger sees a reduction in taxes and social security contributions – this would allow the government to ensure that citizens keep more money from their gross earnings.

The president of the German Trade Union Confederation (DGB), Yasmin Fahimi, believes that it is now important to “do everything possible to prevent a recession, stabilize production and secure jobs.” The participants in the meeting agreed that so far there has been no so-called wage-price spiral, meaning that inflation is not driven by high wages, says the head of the DGB.

Government measures that have already been adopted will relieve the average household by about 1,000 euros per year. However, the burdens are “significantly higher than that,” emphasizes the union leader. Fahimi had previously called for the introduction of a cap on energy prices.

Concerted action – an idea from the 1960s

Concerted action recalls the initiative of the same name from 1967 launched by the “Grand Coalition” (Christian Democrats and Social Democrats) in Germany. The idea was that the then-approaching crisis and rising unemployment should be jointly countered and that the government, local authorities, trade unions and employers' associations, together with the central bank Bundesbank, should act in a coordinated manner.

The then Minister of Economics Karl Schiller, whose idea it was, spoke of a “table of social reason.” He hoped to avoid the “overheating” of the economy that could occur due to trade union demands for wage increases.

Then, as now, there was a danger that wages and prices would condition each other in a spiral of constant increases and thus lead to a constant rise in inflation. The trade unions were then reluctant to enter the negotiations. In total, there were ten rounds of talks over the next 10 years, but in 1978 the trade unions definitively withdrew, writes Deutsche Welle.

Source: index.hr