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A Wageflation Hangover Is Coming for European Companies

The recent season of strikes at TotalEnergies, Stellantis, SAS and Airbus shows workers are determined to boost pay in 2023 to offset eroding purchasing power.

Waving IG Metall union flags, Airbus employees rally in front of a company factory in Hamburg on Nov. 1.

Waving IG Metall union flags, Airbus employees rally in front of a company factory in Hamburg on Nov. 1.

Photographer: Bodo Marks/Getty Images

European companies dealing with the worst energy crisis and inflation in four decades are bracing for a fresh shock: wage inflation and the increasing threat of worker actions. That ominous theme has emerged in this earnings season, with most of Europe’s biggest companies—from Unilever and Nestlé to L’Oréal, Sodexo and Ahold Delhaize—warning that prices might have to rise further in 2023 amid tough wage negotiations in a tight labor market.

A season of strike action is already in full swing across Europe, as workers—suffering the biggest decline in real income in years—push for higher pay. Workers at TotalEnergies in France, pilots at Scandinavian airline SAS and production staff at carmaker Stellantis in Italy have all gone on strike in recent months. The latest in a string of British rail worker strikes was canceled at the last minute last week, but staff at Britain’s Royal Mail have strikes planned in November and December. And on Nov. 7 workers at UK packaging maker DS Smith, which supplies multinationals including Amazon, voted to strike.