CAPTION: German think tank chief says wages must increase with inflation. (icture alliance/dpa)
The president of a leading German economic think tank called for wages to be adjusted according to inflation, saying it was "absolutely necessary" to compensate for rapidly increasing prices.
Bigger pay packets are also important "to keep consumption buoyant," Marcel Fratzcher of the German Institute for Economic Research (DIW) told radio broadcaster Deutschlandfunk.
"If this doesn't happen, businesses will run into trouble, unemployment will rise and then we will get into a spiral of ever weaker growth and higher inflation," the economist said.
Fratzcher said policymakers needed to help people in a targeted way. Measures taken in Germany - for example with the €300 ($325) energy payment for every employed person - were positive. "That is already a good step," Fratzscher said.
The wrong approach, however, would be "populist measures" such as a fuel price cap. Petrol subsidies would be counterproductive, he said: "It doesn't reduce energy consumption, but ultimately throws a large part of this money down the throats of oil companies."
Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.
A single purchase
