Cost of Living
Rising inflation has the potential to become the Austrian government’s next political crisis
Servus!
The tide is turning in favor of Ukraine. Last week, Ukrainian armed forces were able to stage a number of counteroffensives in the northern part of the country in towns surrounding Kyiv like Irpin and Vilkhivia near Kharkiv. By the weekend, it became clear that Russian forces had retreated from a number of towns around the capital as well as near Chernihiv. As Ukrainian forces moved into one of those reclaimed towns, Bucha, it became clear that a war crime had taken place there, with video footage and photographic images showing “the bodies of men in civilian clothes lying on the streets. …Some images showed bodies with their hands bound behind their backs.”
“The gruesome images of civilians shot to death in Bucha expose that war crimes have been committed there,” chancellor Karl Nehammer said Sunday. “They must be thoroughly investigated and those responsible brought to account. The Russian army has to answer for these crimes,” added Nehammer, calling for independent observers to be allowed to enter Bucha to carry out investigations. Pressure is growing and will continue to grow for Austria to act in concert with their European partners to ramp up EU-level sanctions on the Putin regime and increase lethal and non-lethal military aid to the Ukrainian military.
Back home, Nehammer must contend with the economic fallout from Russia’s invasion of Ukraine. Although unemployment is now at its lowest level since 2008, 6.3 percent, the rate of inflation in Austria hit 6.8 percent in March, up from 2 percent in that same month one year ago. Inflation has reached a level not seen since 1981; rent, energy prices, the price of gas at the pump, and the cost of supermarket staples are all on the rise. In February, the price of butter rose by 22 percent, cooking oils and fats by 12.9 percent, and vegetables by 6 percent. Per the boss of the German supermarket chain Aldi Nord: “The era of cheap groceries is over.”
For those interested in supporting the effort to help Ukrainians displaced by war, the following Austrian or Austrian-backed organizations are accepting donations:
Rising inflation has the potential to become the government’s next political crisis. The coalition is already in a weak position due to its recent handling of the COVID-19 pandemic and a series of corruption scandals that brought down former chancellor Sebastian Kurz and now threatens parliamentary president Wolfgang Sobotka. Austria’s anti-corruption authorities, the WKStA, are currently investigating Sobotka over possible abuse of office during his time as interior minister. The WKStA wants to know how it came to be that Franz Eigner, who is close to Sobotka’s People’s Party (ÖVP), was appointed deputy director of Vienna’s state police force. The presumption of innocence applies.
But rising inflation is especially dangerous because it threatens Austria’s improved employment situation at the same time as it puts pressure on people’s pocketbooks. On Friday, finance minister Magnus Brunner rolled out a whole series of measures designed to alleviate the effect of rising electricity, gas, and fuel prices on industry. Inflation is making salary negotiations between industry and labor increasingly difficult. Negotiations over a new collective bargaining agreement for paper industry workers ended after only 25 minutes last week, with industry bosses walking out after unions asked for a 6 percent pay increase. A four-day week in industry, a competitive spiral of wages and prices, and stagflation are all foreseeable scenarios that keep government ministers up at night.
When asked by the pollster Peter Hajek which party had the best answers to the cost of living crisis, 19 percent said the Social Democrats (SPÖ), 8 percent the ÖVP, and 3 percent the Greens. SPÖ leader Pamela Rendi-Wagner has called for parliament to be recalled for a special session on the cost of living. She supports an income tax cut, adjustments to pensions to account for inflation, tax and duty reductions on petrol, gas, and electricity, and an increase in the rent ceiling to be repealed in order to soften inflation’s impact. “Who does the government actually work for?” Rendi-Wagner recently asked Brunner. He and his government better have an answer—and fast.
Bis bald!
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