But employers in some sectors were also willing to offer high wage increases. The public sector, for example, saw larger revenues with rising inflation. And some firms in the private sector experienced a boost in profits generated by inflation and were therefore willing to grant relatively large wage increases.
In some cases, this led workers and unions to demand similarly large wage increases, irrespective of the conditions in their particular sector. BIS Review 51/2003  1  Thus, he argued that it is not the recently observed rate of inflation, but rather the expected rate of inflation that plays a prominent role in wage-setting.