EXCHANGE RATE POLICY AND PAY POLICY

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AUSTRIA
EXCHANGE RATE POLICY AND PAY POLICY
WECHSELKURS- UND LOHNPOLITIK

Exchange rate policy and pay policy are closely linked: if a country's unit labour costs rise in relative terms (i.e. more than the average for its trading partners), this is equivalent to an upwards revaluation and the price factor results in a worsening of the country's competitive position on the world markets.

In the 1970s, when oil and raw materials prices exploded and the import of inflation led to a serious danger of a wage-price spiral, the Austrian Trade Union Federation proposed pegging the Austrian schilling to the Deutschmark, in order to control imported inflation through a “hard-currency policy” (revaluation policy). The unions have therefore adopted this as a basis of their policy on pay and taken account in their pay demands of the country's international competitiveness. See also Austro-Keynesianism.))


Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.
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