Workers in Europes biggest economies are among the least likely to be seeking pay rises in the next year, despite feeling the some of the biggest pressures from rising prices.
Thats the conclusion of a global survey carried out by YouGov Plc and shared exclusively with Bloomberg News. It may allay concerns at central banks about the potential for an inflationary spiral in wages.
The poll, which covered 18 countries and involved 20,000 people, showed just one-in-five workers in Spain, and one-in-four in Germany, plan to ask for a salary bump. In the U.K., where policy makers have been particularly worried about higher wage settlements, the number is 30%. That compares with 40% in the U.S. and more than 70% in Indonesia, India and the United Arab Emirates.
With inflation soaring around the world, and likely to go higher due to the impact of the war in Ukraine, central bankers have become increasingly concerned about so-called second-round effects on inflation. Thats where higher prices translate into demands for higher pay, which then force firms to increase prices even more.
Bank of England Governor Andrew Bailey has been particularly vocal about the risk, stoking controversy by calling on employees to exercise restraint with their pay demands. U.S. Federal Reserve Chair Jerome Powell has expressed similar unease, albeit in a less incendary fashion.
The picture is slightly different in the euro region where policy makers have repeatedly said that, despite inflation at almost 6%, wage growth remains muted overall. Bundesbank chief Joachim Nagel said last week that there currently are “no signs” of a wage-price spiral.
That view rings true with the figures in the YouGov survey, which was carried out between Feb. 22 and March 8. Even those workers who are seeking higher pay are set to make reasonably meager demands. Around the world, 35% said they would ask for a rise of between 2.1% and 5%.
In Britain, where inflation is already 5.5% and may reach double digits later this year, more than half of those polled said theyd request a rise of less than 5%. That compares with 42% in the U.S.
While German and Italian workers were less likely to ask for raises overall, those that planned to had more aggressive demands, with more than 40% asking for rises of 5% or more.
The scale of demands varied across the world, but the reasons for not seeking higher pay were very similar. In every country apart from Denmark, the majority of those not seeking a raise said it was because “theres no chance my employer would grant one.” The Scandinavian country also returned the most workers saying they were happy with their current rate.
The muted demands are all the more striking when compared with the soaring cost of living in many countries, with higher energy prices and pandemic-related supply issues resulting in a surge in household bills. About 90% of people in Spain, Italy, German and the U.K. — who were among the least likely to seek higher pay — said the cost of living had gone up for them in the past 12 months.