February 8, 2023

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EXCLUSIVE: ECB union says staff have lost faith in leadership on inflation and salaries

  • 40% of ECB employees have low or no confidence
  • Two-thirds of them say trust has been damaged
  • 63% worry about the ECB’s ability to protect purchasing power

FRANKFURT, Jan. 18 (Reuters) – (This story was corrected on Jan. 17 to restore words that were dropped in paragraph 11)

European Central Bank staff are losing confidence in the institution’s leadership after the European Central Bank’s failure to control inflation and reward wages that lagged behind the price jump, according to a survey by the labor union IPSO.

The responses confirm that even central banks, whose primary responsibility is to combat inflation, are not immune from staff discontent with the sharp rise in the cost of living.

The survey was organized in the context of a dispute between the IPSO, which holds six out of nine seats on the European Central Bank’s staff committee, and the central bank’s governing body over pay and remote working arrangements.

An ECB spokesperson would not comment directly on the IPSO findings when asked, but pointed to a separate survey of staff, conducted by the ECB itself last year, which showed that 83% of the nearly 3,000 respondents were proud to work for the ECB and 72% would recommend it. with it.

The results of the IPSO survey, which focused largely on wages and remote working arrangements but also included questions about confidence in the governing body, were sent to European Central Bank staff on Tuesday in an email, seen by Reuters.

They show that nearly two-thirds of the 1,600 respondents said their confidence in Lagarde and the rest of the six-member ECB Governing Council had been damaged by recent developments such as high inflation and wage increases disproportionate to rising prices.

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When asked how much they trust Lagarde and the Governing Council when it comes to the leadership and management of the European Central Bank, the central bank for the 20 countries that use the euro, just under half of respondents said “moderate” (34.3%) or “high” (14.6%).

But more than 40% of the respondents said they had “low” confidence (28.6%) or “no” (12%), while 10.5% could not answer.

“This is a serious concern for our organisation, as no one can properly lead an organization without the trust of its workforce,” the union said in its email.

Increase inflation, pay battles

It was the first survey by IPSO to ask about confidence in senior management since Christine Lagarde took over as European Central Bank president in late 2019.

A similar IPSO poll of European Central Bank staff, conducted before its predecessor Mario Draghi stepped down, showed that 54.5% of 735 respondents rated his presidency as “very good” or “outstanding”, with support for his policy measures ranking higher.

After that, inflation in the eurozone was low for a decade. Its recent rise to multi-decade highs in countries around the world has seen a resurgence in battles over wages between workers and the companies and organizations that employ them.

The majority of respondents in the October 2019 survey also complained about a lack of transparency in employment and perceived nepotism under Draghi.

Latest Bank of England Staff surveyalso conducted in 2019, showed that 64% of respondents had “confidence and confidence in the Bank’s leadership.”

US government 2022 survey Of employees in federal departments and agencies, it found that 61% of respondents have a “high level of respect” for their organizations’ senior leaders — roughly stable compared to two years ago.

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The ECB spokesperson also pointed to internal surveys in 2020-21 that found that nearly 80% of respondents were satisfied with the health and safety measures the ECB has taken in response to the coronavirus pandemic.

A recent IPSO survey showed that 63% of employees who responded were worried about the ECB’s ability to protect their purchasing power after they received a wage increase of just 4% last year – or nearly half of the rise in consumer prices.

The European Central Bank has been criticized by politicians, bankers and academics for first underestimating the cost of living increase and then offsetting it with painfully large increases in borrowing costs.

Lagarde, who is not an economist and had never worked for a central bank before joining the ECB, colorfully defended her board at an event with staff last month.

“Without them I would have been a sad, lonely cowgirl lost somewhere in the pampas to monetary policy,” Lagarde said, according to a December 19 town hall recording seen by Reuters.

She and her fellow board members have long worried about the risks of a potential “wage-price spiral,” where higher salaries fuel prices, which they argue will make it difficult for the ECB to return inflation to its 2% target.

But IPSO said the concern was misplaced and workers should not be made to bear the brunt of the current crisis in inflation.

“The ECB may advocate lower real wages, but that is not our position as a staff union,” she wrote in her letter to ECB employees.

Editing by Catherine Evans

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