Retailers, hoteliers and restaurant owners are reporting that they had a good Yuletide period.
After two years of restrictions, in 2020 and 2021, the last Christmas season saw a return to what we know as normality.
Many restaurants were fully booked, hotels were in full swing and shops were brimming with customers. Some people preferred to stay at home to avoid the crowds and confusion that such festivities bring about, but their contributions through monetary gifts or food deliveries were also contribution to the economic wheel.
The Covid-19 pandemic is not over, as we can see that the virus can easily spread if uncontrolled. Some European countries, the US and Japan, for example, have re-introduced restrictions to people arriving from China. Let us hope that this is just a momentary fallback, and that matters will be resolved quickly.
But it would be wrong to under-estimate the potential of the virus. The last three years have shown us that it is impossible to predict even the immediate future. It would be a big setback if we had to go back to where we were at the beginning of 2021 or 2022.
The most pressing issue is, of course, inflation. We have seen prices skyrocket over the past 12 months, as even the most important commodities were hit by a steady rise in prices. The war in Ukraine, nearly one year on, is not helping. The end of it does not seem to be anywhere close, and it is therefore likely that the situation will not get better anytime soon.
This rise in prices has pushed the Cost of Living Adjustment which will be given as from January to unprecedented levels, and one has to see how this will be affecting business. A €9.90 increase per week, per employee is a hefty cost which will, inevitably, continue to push prices up as businesses would need to recoup the money forked out.
It is a vicious circle that is hard to control, and matters will get worse if we allow it to spiral.
In the run-up to the budget that was presented last October, we were promised that the social partners will be looking at the mechanism and see if something better, and to the advantage of both employers and employees, can be identified.
All the stakeholders, the government in primis, should not take the matter lightly. The government has kept inflation lower by committing itself to absorb the increased costs of energy, but one has to ask whether this measure will remain sustainable in the long term.
Employers have already made some suggestions, with unions countering with their proposals. What is sure is that some form of agreement must be reached early in the year, so as not to arrive at the preparation for the 2024 budget with matters still hanging in the air.