BOEBLINGEN, Germany, Feb 24: Germany’s biggest trade union, IG Metall, agreed on Tuesday to a 3.4 percent wage increase for one year from April for the southwest region plus a one-off payment of 150 euros, saying it would help boost private consumption in Europe’s biggest economy. The metalworkers union also agreed with Suedwestmetall employers association on part-time conditions for older workers and job-related training for employees in Baden-Wuerttemberg, an industrial and car-making hub and home to Daimler and Bosch.
Deals agreed in the pilot region traditionally serve as a template for agreements across the nation. By reducing the relative competitiveness of German industry, wage increases may also help even out the economic imbalances within the euro zone which many have blamed for the bloc’s crisis.
The wage increase is more than three times above Germany’s inflation rate, which stood at 0.9 percent in 2014. The union, which represents 3.7 million workers, had called for a 5.5 percent wage increase for 2015, saying solid growth justified their demand. Employers had previously offered a pay increase of 2.2 percent from March 1.
Roman Zitzelsberger, head of IG Metall’s Baden-Wuerttemberg branch said the deal, achieved after marathon negotiations which ran through Monday night, was a ‘satisfactory compromise’.
The agreement meant employees were benefiting from company profits and would have more money in their pockets. ‘This deal guarantees that the most important engine of the economy at the moment, private consumption, will continue to perform at a high level,’ said Zitzelsberger. Europe’s largest economy grew by 1.6 percent last year and the government expects it to grow by 1.5 percent in 2015. Years of wage restraint, combined with labour market reforms, have helped turn Germany – once described as the ‘sick man of Europe’ – into an economic success story. The deals, many of which did not keep pace with inflation, improved competitiveness and helped bring down unemployment. Employer association Suedwestmetall president Stefan Wolf said the deal was painful for companies. ‘This is, by a wide margin, the biggest real wage increase for years,’ said Wolf.
The union had staged a series of token strikes in the last month to back their pay demand. On Monday, about 100,000 workers took part in warning strikes at 480 plants – mainly in the southwestern state of Baden-Wuerttemberg, the union said.
(AGENCIES)
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