Falbr meets Tuma

22-11-2001

Inflation, wage growth, and unemployment - those were the main issues on the agenda when the governor of the Czech National Bank, Zdenek Tuma, held his annual meeting with the head of the Czech Confederation of Trade Unions, Richard Falbr, on Monday. You might expect vastly differing outlooks on such questions. Not so, Mr. Falbr told Radio Prague during a break in the meeting.

Falbr - "Our estimations are very similar. The only difference we see is in the expected unemployment, which we expect to be higher because of the privatisation of the energy sector. We are afraid of losing thousands of jobs in the mining sector."

Getting down to actual numbers, Falbr said that the unions wanted to see wage growth of seven to eight percent next year, which is less than this year's rate. The Czech National Bank predicts economic growth of 3.9 percent in 2002 and inflation between 3.3 and 4.7 percent. Tuma said the unions' demand was at the upper limit of sustainability. Excessive wage growth could cause a rise in inflation, or lay-offs as employers try to cut costs, he said.

But how useful are such consultations anyway? Do they serve any purpose? Mr. Falbr believes that they do.

Falb - "We have given certain recommendations which can of course influence the behaviour of the banking in the next year. It's a very useful relation we are building more than three years already and I think that it's a good example - even for some other countries in Central and Eastern Europe. "