OECD irresponsible to recommend interest rates hikes

Commenting on the OECD Interim Economic Outlook, Veronica Nilsson, Acting General Secretary of TUAC (the Trade Union Advisory Committee to the OECD) said

“It is irresponsible to call for further interest rate increases in the US and the euro area. It is the wrong call in the face of economic slowdown and an emerging financial crisis.

“It is wrong of the OECD to warn against pay rises when working people’s standard of living has been hit hard by the cost-of-living crisis, and while companies are making record profits.

‘’Calling for more flexible labour markets is very damaging for working people. Workers need a pay rise to sustain demand not more flexible contracts and working conditions.

“The collapse of the Silicon Valley Bank, which Nobel-prize winning economist Joseph Stiglitz warned the OECD was “predictable and was predicted”, demonstrates the dangers of large and rapid interest rate increases.

“The OECD is putting too much emphasis on interest rate rises and tighter monetary policy, and not enough on measures to resolve the supply bottlenecks that are at the root of high inflation. Increasing green energy, investing in childcare and paying better wages to get more people into the labour market, not throwing people out of a job or making labour markets even more flexible and insecure for workers, are the policies that will tame inflation while also yielding long term benefits.

“The OECD is also turning a blind eye to soaring corporate profits while warning against non-existent wage – price spirals. Profit margins are at record highs so, wage increases will not push up prices and are needed for working people to cope with the cost-of-living crisis. and to sustain economic demand.

“The monetary tightening promoted by the OECD will make matters worse and will make accompanying OECD solutions to inflation, such as investing in a greener economy, more expensive.”