Chamber and Union recommend caution as inflation shows sharp fall

Following a recent meeting, the Gibraltar Chamber of Commerce and Unite, the Union have concluded their negotiations for this year’s increase in minimum wages for workers in the Retail and Distributive Trades. Rates will be increased by 1%.  These are minimum rates, established where there is no collective bargaining agreement between the union and employers.

The recently published annual inflation figure shows a rate of 3.4% for the year ended December 2009.  However, during the final quarter of 2009 there was a decrease of 1% in the inflation rate.  The lead up to the Christmas season is usually the most buoyant quarter of economic activity in Gibraltar.  The statistics which show that prices actually fell by an average of 1% from October 2009 to December 2009 give considerable cause for concern and indicate that consumer expenditure is being curtailed quickly.  This confirms anecdotal evidence that Christmas trading was difficult for many traders in the retail and wholesale sectors.

The outlook for the rest of 2010 remains bleak in both Spain and in the UK, Gibraltar’s two biggest trading partners. The strong euro continues to erode margins for many local businesses in the retail and wholesale sectors and taken together both the Chamber and Unite recognise the need for prudence and restraint.

The Chamber and the Union are in full agreement that the priority this year must be to preserve full employment as much as possible and this can only be achieved by managing costs.  Any significant increase in unemployment locally will have knock-on effects elsewhere in the economy.

The full list of the increased minimum rates will be circulated to the relevant sectors in the next few days.