According to a survey conducted by trade union IPSO, European Central Bank employees are losing faith in the institution’s leadership as a result of the ECB’s failure to control inflation and a pay raise that lagged the rise in prices.

The survey was organized in the context of a pay and remote-working dispute between IPSO and the ECB, which holds six of nine seats on the ECB’s staff committee.

It is the first IPSO survey to inquire about trust in top management since Christine Lagarde took over as President of the European Central Bank in late 2019.

When asked about IPSO’s findings, an ECB spokesperson declined to comment directly, but pointed to a separate staff survey conducted by the ECB last year, which found that 83% of nearly 3,000 respondents were proud to work for the ECB, and 72% would recommend it.

Further ECB surveys in 2020-21 found that roughly 80% of respondents were satisfied with health-and-safety measures implemented in response to the coronavirus pandemic.

The results of IPSO’s survey were sent to ECB staff in an email on Tuesday, according to Reuters.

They revealed that two-thirds of the roughly 1,600 respondents said recent events such as high inflation and a pay increase that did not match the rise in prices had harmed their trust in Lagarde and the rest of the six-member ECB board.

When asked how much they trusted Lagarde and the board to lead and manage the ECB, the central bank for the 20 countries that use the euro, just under half said “moderate” (34.3%) or “high” (14.6%).

However, more than 40% of respondents said they had “low” (28.6%) or “no” (12%) trust, with 10.5% unsure.

“This is a serious concern for our institution, as no one can correctly lead an organisation without the trust of its workforce,” the union said in its email.

Lagarde, who is not an economist and has never worked in a central bank before joining the ECB, defended her board in a colorful manner at a staff event last month.

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

Staff criticism may sting because it relates to the ECB’s core mission – wages and inflation.

Politicians, bankers, and academics have chastised the ECB for initially underestimating a rise in the cost of living and then compensating with large and painful increases in borrowing costs.

A similar IPSO survey of ECB staff, conducted just before Lagarde’s predecessor, Mario Draghi, rated his presidency “very good” or “outstanding,” with support for his policy measures even higher.

However, a majority of respondents in the October 2019 survey also expressed concerns about a lack of transparency in hiring and perceived favoritism under Draghi.

According to the most recent survey, 63% of respondents were concerned about the ECB’s ability to protect their purchasing power after receiving a 4% pay increase last year – roughly half the rise in consumer prices.

Lagarde and her fellow board members have long been concerned about the risk of a “wage-price spiral,” in which higher wages feed into higher prices, making it more difficult for the ECB to return inflation to its 2% target.

However, IPSO believes that concern is misplaced, and that workers should not be forced to bear the brunt of the current bout of inflation.

“The ECB might be preaching lower real wages, but this is not our stance as your staff union,” it wrote in its message to ECB employees.

(Adapted from Reuters.com)

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