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As inflation hits, CB staff’s trust in leadership is eroding, based on a survey

FILE - The Euro sculpture stands in front of the European Central Bank, right, in Frankfurt, Germany, in this Dec.16, 2011 file photo. The European Central Bank took bold steps Thursday June 5, 2014 to protect Europeís fragile economic recovery, cutting interest rates and offering to pump more money into the financial system. (AP Photo/Michael Probst, File)

According to a study by the trade union IPSO, personnel at the European Central Bank are losing faith in the institution’s leadership as a result of the ECB’s failure to manage inflation and a compensation award that was behind the increase in prices.
Since Christine Lagarde became ECB President in late 2019, this is IPSO’s first survey to inquire about faith in top management. IPSO retains six of the staff committee’s nine seats.
It was planned in conjunction with discussions about salary and flexible scheduling.
On Tuesday, results were confirmed and disseminated via email to ECB staff.
They revealed that two-thirds of the nearly 1,600 respondents believed recent events, like as high inflation and salary increases that did not keep pace with price increases, had undermined their confidence in Lagarde and the other six members of the ECB board.

Just under half of the respondents replied “moderate” (34.3%) as well as “high” (14.6%) when questioned about how much faith they had in Lagarde and the boards when it came to leading and administering the ECB, the central or main bank for the 20 nations that use the euro.
However, more than 40% of respondents stated they had “poor” (28.6%) or “no” trust (12%), and 10.5% were unsure.
Since no one can effectively run an entity without the support of its staff, the union noted in its email that this is a serious worry for the institution.
When questioned about IPSO’s findings, an ECB spokesman declined to make any direct comments but cited a separate staff survey conducted by the ECB last year that revealed 83% of the almost 3,000 respondents were glad to operate for the ECB and 72% would suggest it.
At a staff gathering last month, Lagarde, who was not an economist and was not a central banker prior to joining the ECB, brightly defended her board.
It’s simple to picture a depressed, lonely cowgirl lost in the Pasture of monetary policy if it weren’t for them, Lagarde added, according to a tape of the town hall from December 19 that was obtained.
The staff’s criticism may be hurtful since it touches on the key objectives of the ECB, which are wages and inflation.
Politicians, bankers, and academics have criticised the ECB for initially misreading a rise in the cost of life and then conjuring up it with significant and upsetting hikes in borrowing costs.
Just prior to Lagarde’s resignation, a comparable IPSO survey of ECB employees revealed that 54.5% of 735 participants evaluated Mario Draghi’s presidency as “very good” or “great,” with approval for his policy initiatives even higher.
The majority of poll participants in October 2019 expressed dissatisfaction with apparent favouritism and a lack of recruitment transparency.
After receiving a wage raise of only 4% last year, or approximately half the increase in consumer prices, the newest study revealed that 63% of employees were concerned about the ECB’s capacity to protect their buying power.
Lagarde and her colleague board members have long expressed concern about the possibility of a “wage-price spiral,” in which rising wages lead to increased prices.
The sources agree this scenario would make it more difficult for the ECB to reduce inflation to its 2% objective.

However, IPSO said that this worry is unwarranted and that workers shouldn’t be forced to face the majority of the present inflationary wave.
The ECB may advocate for lower real pay, but as your staff union, we disagree, the bank stated in a letter to its employees.

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