The head of the Austrian Institute for Economic Research (WIFO), Gabriel Felbermayr, expressed his concerns about the loss of wages and highlighted the problems of high wages for the economy.
The report noted a decline in economic output and per capita income last year, which was accompanied by an increase in unemployment. Even with the relative decline in inflation rates, prices remain higher than the European average. Forecasts for 2024 also raise some doubts.
Felbermayr forecasts only modest growth of 0.2% in gross domestic product this year. However, with population growth, this means a drop in per capita income, which is bad news.
On the positive side, the federal government's €2.2 billion construction package, unveiled last week, is aimed at supporting an industry that has become problematic for many experts.
High energy prices remain, which continue to remain a serious problem. It is predicted that electricity prices will not return to previous levels. Rapid expansion of renewable energy sources becomes an important challenge in this context.
Felbermayr also discussed the high-wage deals that were struck last fall. This has various consequences: on the one hand, high wages strengthen purchasing power, and on the other hand, they become a problem for local businesses, which can lead to layoffs. WIFO previously warned of this dilemma during the autumn rounds of wage negotiations.
