European Central Bank's Strategic Overhaul: A Broken Promise to Europe's Labor Force
In a critical assessment, Europe's trade unions have accused the European Central Bank (ECB) of perpetuating harmful economic myths and favoring capital over labor in its recently published 2025 Strategic Review.
The main criticisms against the ECB's review revolve around its stance on labor and wage-driven inflation. Critics argue that the review ignores critical lessons from recent economic experiences, such as the impact of wage growth on inflation, thereby favoring capital over labor.
The ECB's strategic assessment is said to perpetuate an economic myth that downplays the importance of labor, focusing more on capital interests and maintaining policies that protect financial and capital markets rather than supporting labor income or wage growth. This approach contributes to undermining labor’s role in the economy, leading to criticism that the ECB's stance tilts towards favoring capital owners by emphasizing inflation control without integrating wage dynamics adequately into its monetary policy framework.
Despite the ECB's recognition in its broader inflation and policy analysis of the importance of understanding heterogeneous price developments and inflation drivers, including granular data on wages and prices, critics see a disconnect between this recognition and the actual strategic focus and policy actions, which are perceived as insufficiently labor-sensitive and more oriented towards maintaining capital market stability.
The ECB's response to the inflation shock of 2022-2023 was based on outdated assumptions about wage-driven inflation. The bank doubled down on raising interest rates, causing severe consequences such as pushing households to the brink, straining public services, and delaying vital investment in the green and digital transitions.
Europe's trade unions demand a genuine shift in monetary policy that empowers, not weakens, collective bargaining. Ludovic Voet, the confederal secretary of the European Trade Union Confederation, has been vocal about the need for a fairer economy, built on decent work, sustainable investment, and shared prosperity.
The debate surrounding the ECB's 2025 Strategic Review is far from over, as workers demand not neutrality but justice and bold, coordinated policies that serve the people, not just the markets. The post is sponsored by the ETUC.
[1] Source: European Trade Union Confederation (ETUC)
- Trade unions in Europe, as exemplified by the European Trade Union Confederation (ETUC), are calling for a shift in monetary policy, advocating that it should strengthen rather than weaken collective bargaining.
- The ongoing debate about the European Central Bank (ECB)'s 2025 Strategic Review includes criticism that the bank's policies, such as its response to the inflation shock of 2022-2023, are insufficiently sensitive to labor concerns and are more oriented towards maintaining capital market stability.
- The ETUC, in its stance on the ECB's strategic review, emphasizes the need for policies that prioritize worker welfare and support finance for green and digital transitions, rather than focusing solely on inflation control and capital interests.
