# Wage, indexed (index-linked wage, indexed wage)

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- Post ID: 593508
- Modified: 2023-07-25T21:14:02+00:00
- Language: en

## Definition

Agreements between the parties to collective bargaining agreements in the labor market under which the agreed wage is automatically adjusted to inflation, usually measured by the cost-of-living index. Such agreements are viewed with suspicion by central banks. This is because in many cases higher payments went to foreign countries, such as when the price of oil rose and spending on imported goods in general increased. This money is now no longer available for distribution domestically. It has been "swallowed up" in the language of financial journalists. The escalation clause thus causes a further increase in inflation: a wage-price spiral is set in motion. - In the euro area, seven member states currently (at the end of 2013) have such indexation clauses (Belgium, France, Spain, Luxembourg, Cyprus, Slovenia and Malta), which amounts to about sixteen percent in the HICP. The ECB keeps asking for the abrogation of the corresponding labor contracts. - See oil price, inflation, imported, oil price, oil price equalization, oil price shocks, petrodollar, commodity prices, shocks, structural, electricity price, second-round effects, automated. - Cf. ECB Monthly Bulletin, May 2008, pp. 55 ff. (wage indexation in the euro area; detailed overview). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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