Purchasing power will be limited without an increase in salaries
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The rise in inflation poses a policy dilemma, according to the Parliamentary Budget Office: This is because, on the one hand, a general increase in salaries would fuel inflationary pressures, while on the other, not increasing them would significantly limit wage earners’ purchasing power.
Therefore, in the PBO’s view, the consequences should be weighed and care should be taken to prevent income losses for low-wage earners in particular, while ensuring there is no inflationary feedback and loss of competitiveness.
However, the PBO excludes those paid the minimum wage, as it does not consider that they affect the evolution of inflation.
