Central bank chief urges companies to raise wages by 5-7%

Klaas Knot. Photo: De Nederlandsche Bank

Dutch central bank president Klaas Knot has called on companies to raise wages, saying their profits are enough to deserve a decent pay raise.

A pay rise of between 5% and 7%, coupled with the government’s energy price cap, would be enough to cushion the impact of the price hike, Knot told the Nieuwsuur TV show on Thursday evening.

“We have done the calculations and we don’t want wages to fall any further. If you want to keep salaries at the same level, you need a salary increase of between 5% and 7%. It is an average at the macroeconomic level,” he said.

Commerce, industry and transport all earn high profits, especially those that have grown on gas and cheap labour, he said. ‘It is now over. We have a structural labor shortage, and both energy and labor will be scarce in the years to come.

And that, he said, means higher wages in sectors that can afford it.

Knot was among a group of economists who spoke to ministers on Thursday about measures to offset the impact of high inflation.