An OECD report released on Tuesday described workers as receiving a double blow to their livelihoods.
A windfall tax should be imposed on other sectors of the European economy, according to one of Europe’s largest trade union organisations.
Last September, a temporary windfall tax was approved to curb fossil fuel companies’ surplus profits and Esther Lynch, the General Secretary at the European Trade Union Confederation (ETUC), says this should now be extended.
“The measures that should be taken are to increase the windfall taxes on windfall profits because many companies during last year, 2022, increased, doubled profits without any increase in their taxes,” Lynch told Euronews.
A report released earlier this week by the Organization for Economic Co-operation and Development (OECD) described workers as victims of a “double blow” – inflation driving their wages down as labour taxes go up.
It adds that there has been a loss of purchasing power in 35 of its 38 member states.
Lynch said that the European Central Bank is making the situation worse by increasing interest rates.
“Increasing interest rates is the wrong solution,” the ETUC chief said.
“It just hits working people and families harder. Lots of families have loans for things like a car and now we even see that families have to put electricity bills and other bills into their credit cards.
“When we increase interest rates on top of that, it makes a difficult situation absolutely impossible to manage.”
Last year, household bills, transport and food price rises were three to four times higher than wage rises, according to the OECD.
Total inflation in the EU was 9.2%, while average wage increases stood at just 4.4%.
Some experts have called for a new anti-crisis financial instrument to combat such difficulties, but the European Commissioner for Jobs and Social Rights, Nicolas Schmit, has defended the Commission’s position on targeted support for the more vulnerable and tackling unfair practices in a number of fields.
“We have in some sectors a lack of competition,” Schmit said in an interview.
“We have special profits taken with the argument that there is inflation and that is why they increase the prices.
“This is driving also, in some sectors, these price hikes and this has to be combated. It can be done also through more competition on different markets.”
The OECD warned in its report that the worst affected by this so-called “double blow” are families with children, particularly on lower incomes and that tax benefit systems are not being fully adjusted in line with inflation.