Local view for "http://purl.org/linkedpolitics/eu/plenary/2002-02-27-Speech-3-193"
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"en.20020227.14.3-193"2
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"Mr President, your generosity is appreciated although as I am not an economist, nor a statistician, nor a liar I hope, I think I will be quite brief.
What strikes me about me about the Commission's statement is that in a zone as large as the EMU, labour costs are generally considered as the main potential source of inflation. That is an overstatement of the situation. I accept, of course, that rises in prices and labour prices and labour costs can impact on inflation, but clearly in our Member State economies, where increasingly wage rates are negotiated through national agreements and are linked to productivity, and have all kinds of other factors built into any increases that employees get, the likelihood of labour costs being the driving force behind inflation to my mind is untrue. That is not to say that it is not a factor.
What is a significant factor, however, is the operation of the market itself. I have personal experience of this in Ireland where prices on the housing market have simply exploded. Houses that were being sold five years ago for IEP 80 000 are now selling for IEP 250 000 Irish Pounds. This is extraordinary and wage rises had nothing whatsoever to do with it. It had to do with market demand, growth in the economy, etc. In fact probably, indirect taxation as part of government policy in relation to spending has a greater impact on inflation.
Having said all that, this is a useful tool for the European Union to develop. It is important in order to manage the euro and the European monetary zone. It is inadequate in some respects because large areas of income are excluded. Professional fees for example are not included in this labour cost index and we all know the extent to which professional fees are virtually uncontrollable. These bodies set their own fees by and large, certainly in the Republic of Ireland.
Also the issue of costs for education and training should be factored in, because obviously this is a cost, or should be a cost, in most cases to employers. So this is a useful tool and we should proceed with it. We need to review the position within a year or two to see how it is working to see what else might be factored in. And I would just ask the Commission to bear in mind that if it really believes that labour costs are the main potential factor for driving up inflation it will be making bad policy decisions."@en1
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