Ronald Janssen thinks the European technocrats might be waking up (just a little): ” to put a halt to the downwards slide into deflation and to get the economy back to price stability, the ECB should do more than give speeches. The ECB’s commitment to reaching a reasonable inflation rate needs to be backed up by delivering concrete and convincing action, action that is going beyond the act of simply printing more money that tends to end up in the balance sheets of banks and institutional investors but not in tangible demand in the real economy.
One powerful way to do this, as Japanese policy makers have come to realise, involves the process of collective bargaining. By preventing too low inflation from spilling over into extremely low wage increases, collective bargaining is able to function as a circuit breaker in this process of lower wages chasing lower prices. This has two important implications for the ECB.”
Ronald Janssen is working as economic policy adviser at the Trade Union Advisory Committee to the OECD Trade Union Advisory Committee to the OECD (TUAC).