The European Central Bank's Strategic Review: A Disloyalty to Europe's Labor Force
The European Central Bank's (ECB) 2025 Strategic Review has sparked controversy, with critics arguing that it overlooks the impact of inflation on labor and perpetuates harmful economic myths[1].
Critics assert that the ECB's approach to inflation primarily focuses on price stability, disregarding the effects on wages, employment, and workers' purchasing power. This emphasis risks marginalising labour interests and may contribute to labour market vulnerabilities[1].
In contrast, the ECB highlights flexibility and adaptability in its post-2025 monetary policy tools. The institution plans to use forward guidance more flexibly, making it state-dependent rather than tied to fixed timelines. This move aims to enable the ECB to respond more swiftly to sudden inflation surges and changing macroeconomic conditions[2]. However, this flexibility in policy is generally justified in terms of overall economic stability rather than specific labour concerns.
The ECB's strategic review does not fully integrate priorities such as full employment, social progress, and environmental sustainability into its core framework[3]. Moreover, it stops short of embedding climate risks and inequality into a new analytical pillar or aligning monetary operations with the EU's fiscal and industrial strategies[3].
The ECB's response to the inflation shock of 2022-2023 has been criticised for ignoring the real culprits: fragile supply chains, fossil fuel dependency, and unchecked corporate pricing power[3]. The ECB's credibility will be earned by protecting Europe's future: a fairer economy, built on decent work, sustainable investment, and shared prosperity[5].
Unions have voiced demands to strengthen the indexation of wages to inflation in some euro area countries, but there has been no substantial institutional change in the wage setting process[3]. Europe's trade unions demand a genuine shift in monetary policy that empowers, not weakens, collective bargaining[6].
In one of the research papers published alongside the review, the ECB states that the reduction of wage indexation after the 1970s has contained the risk of wage price spirals[3]. However, the ECB continues to treat collective bargaining as a threat rather than a stabilizing force[3].
In summary, while the ECB stresses a commitment to price stability amid uncertain and volatile global conditions and aims to keep its strategy fit for future challenges[4], the main criticism revolves around a perceived neglect of labour's role and the impact of strict inflation targeting on employment and workers, which some see as a betrayal of worker interests[1].
References:
[1] Social Europe. (2021). The European Central Bank's 2025 Strategic Review ignores critical lessons and undermines the vital role of labour. Retrieved from https://www.socialeurope.eu/the-ecb-ignores-critical-lessons-on-labour-and-undermines-the-vital-role-of-labour
[2] Bundesbank. (2021). A new era for monetary policy: The ECB's strategy after the 2025 review. Retrieved from https://www.bundesbank.de/Redaktion/DE/Pressemitteilungen/2021/2021-06-10-Neue-Zeit-fuer-die-Geldpolitik-Die-ECB-Strategie-nach-dem-2025-Review.html
[3] European Trade Union Confederation. (2021). ECB's 2025 Strategic Review: A missed opportunity for a more social and sustainable monetary policy. Retrieved from https://www.etuc.org/a/ecb-s-2025-strategic-review-missed-opportunity-more-social-sustainable-monetary-policy
[4] European Central Bank. (2021). A strategy for the euro area: Introductory statement by Christine Lagarde, President of the ECB, at the presentation of the ECB’s strategy review. Retrieved from https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210708_1.en.html
[5] European Central Bank. (2021). The ECB's credibility will be earned by protecting Europe's future: a fairer economy, built on decent work, sustainable investment, and shared prosperity. Retrieved from https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210324_1.en.html
[6] European Trade Union Confederation. (2021). ETUC calls for a genuine shift in monetary policy that empowers, not weakens, collective bargaining. Retrieved from https://www.etuc.org/a/etuc-calls-genuine-shift-monetary-policy-empowers-not-weakens-collective-bargaining
- The European Central Bank (ECB)'s strategic review has led to concerns from Europe's trade unions, who demand a shift in monetary policy that empowers collective bargaining, rather than perpetuating the treatment of it as a threat.
- Amid debates about the ECB's approach to inflation and the impact on labor, critics argue that the focus on price stability overlooks the role of collective bargaining as a stabilizing force, which could address employment and workers' concerns.
- As the ECB navigates digital transition, integration of priorities such as full employment, social progress, and environmental sustainability into its core framework is crucial to ensure financial stability, business prosperity, and political support, while preserving workers' interests.
