Exclusive: ECB union says staff are losing faith in leadership amid inflation and wages

  • 40% of ECB staff have little or no confidence
  • Two-thirds say trust is damaged
  • 63% are worried about the ECB’s ability to protect purchasing power

FRANKFURT, Jan 18 (Reuters) – (This story from Jan 17 has been corrected to restore deleted words in paragraph 11)

European Central Bank staff are losing faith in the institution’s management following the ECB’s failure to control inflation and a pay rise that has not kept pace with the surge, IPSO union survey finds prices.

The responses point out that even central banks, whose primary responsibility is to fight inflation, are not immune to staff dissatisfaction with the steep rise in the cost of living.

The probe was organized as part of a dispute between IPSO, which holds six of the nine seats on the ECB’s staff committee, and the central bank’s board over pay and remote working arrangements .

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

The results of IPSO’s survey, which largely focused on compensation and remote working arrangements but also included questions about trust in the board, were sent to staff on Tuesday. ECB in an email, seen by Reuters.

They showed that two-thirds of the roughly 1,600 people polled said their confidence in Lagarde and the rest of the six-member ECB board had been shaken by recent developments such as high inflation and an increase salary that did not correspond to the rise in prices.

Asked how much confidence they have in Lagarde and the board of directors when it comes to leading and managing the ECB, the central bank of the 20 countries that use the euro, just under half of respondents answered “moderate” (34.3%) or “high” (14.6%).

But more than 40% of respondents said they had “low” (28.6%) or “no” (12%) confidence, while 10.5% couldn’t say.

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

INFLATION WAVE, PAID BATTLES

The survey was the first from IPSO to ask about trust in senior management since Christine Lagarde took over as ECB president at the end of 2019.

A similar IPSO survey of ECB staff, carried out just before the departure of his predecessor Mario Draghi, showed that 54.5% of 735 respondents rated his presidency as “very good” or “outstanding”, with even higher support for his policy measures.

However, inflation in the euro zone had been low for a decade. Its recent surge to decades-long highs in countries around the world has seen renewed wage battles between workers and the companies and institutions that employ them.

And a majority of respondents to the October 2019 survey also complained about a lack of transparency in recruitment and perceived favoritism under Draghi.

The latest Bank of England staff survey, also conducted in 2019, showed that 64% of respondents had “trust and confidence in the Bank’s leadership”.

A 2022 U.S. government survey of employees in federal departments and agencies found that 61% of respondents had “a high level of respect” for senior leaders in their organization – roughly unchanged from the previous two years.

The ECB spokesperson also pointed to internal surveys in 2020-21 which revealed around 80% of respondents were satisfied with the health and safety measures taken by the ECB in response to the coronavirus pandemic.

The latest IPSO survey showed that 63% of employees who responded were worried about the ECB’s ability to protect their purchasing power after receiving a pay rise of just 4% last year, around half rising consumer prices.

The ECB has been criticized by politicians, bankers and academics for initially underestimating a spike in the cost of living and then offsetting it with large and painful increases in borrowing costs.

Lagarde, who is not an economist and had not been a central banker before joining the ECB, vociferously defended his board at a staff event last month.

“If it wasn’t for them, I’d be a sad, lonely cowgirl lost somewhere in the pampas of monetary policy,” Lagarde said, according to a Dec. 19 town hall recording seen by Reuters.

She and her fellow board members have long worried about the risk of a potential “wage-price spiral”, where higher wages feed through to prices, which they say would make it more difficult for the ECB to bring inflation back to its 2% target.

But the IPSO said that worry is misplaced and that workers should not bear the brunt of the current inflation crisis.

β€œThe ECB may be preaching lower real wages, but that is not our position as your staff union,” she wrote in her message to ECB employees.

Editing by Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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