When we didn't completely overcome Covid-19, it attacked us with a phenomenon known in the economy, inflation. In fact, at the end of 2021, the constant rise in general prices began to be explained, before the war in Ukraine.

The causes of inflation are multiple, but in short, it would distinguish between excessive widespread demand or that resulting from the additional cost of production. It is true that, once we begin to overcome COVID-19, we begin to use accumulated savings, with the consequent increase in global demand and fuel prices. Thus, in the first case, inflation is due to the shortage of goods and services, while in the second case, fuel prices, as well as transport costs, affect prices of goods and services.

Soon, the financial authorities took action and, instead of controlling oligopolistic fuel prices and the most influential energies on production costs, they started to raise interest rates both in the US and in the EU. With this measure, the economy is stagnating and unemployment is increasing, leading to the impoverishment of the unemployed, as the priority is to stabilise prices by preventing the welfare of workers. However, workers are the ones harmed by inflation, whose share will be smaller in annual GDP, and the prices of goods bought by workers to survive are more expensive and become poorer. It would therefore be essential to index the wages of workers – to adapt them so as not to lose purchasing power after inflation – and that as prices rise, wages are also channelled. But that requires powerful unions. However, indexation does not mean that workers keep their share of GDP, as productivity also increases.

The high rate of inflation made wage indexations known in Brazil or Mexico. Wage indexation was also established in the French State, but the Second World War had just ended and the labor unions were very firm to positively influence working conditions. Later, however, under the chairmanship of Social Democrat Mitterrand, they abandoned indexation because wages had to be set by market forces. In the meantime, the indexation of public debt for the financing of public budgets begins in order to give certainty to financial agents.

Inflation is also penalised by the receiver of mortgage loans, which have increased interest rates to control prices, if not fixed. Thus, another part of the income of this losing economic sector has gone into the financial sector.

Moreover, public debt is acquired by tenants. Governments have always issued public debt and it is an unbeatable investment for millionaires. Now, both vulture funds and gigantic private pension funds buy public debt and index part of it, or demand higher interest rates on the debt… It is no coincidence that Article 135 of the Spanish Constitution is amended so that the debts contracted take precedence in government payments.

Wages should therefore be indexed to maintain the purchasing power of workers. Moreover, the International Monetary Fund, the guardian of neo-liberalism, has shown that the wage hike does not trigger the spiral of inflation, but the rise must be below the rate of inflation. Why does the same not happen if wages rise above the inflation rate?