The European Central Bank supports the Bundesbank in its appeals for
higher wage deals in Germany, Der Spiegel magazine quoted ECB Chief
Economist Peter Praet as saying on Sunday (27 July).
Low wage agreements were needed in some crisis-hit countries in the eurozone to bolster competitiveness, Praet said.
By contrast, in countries like Germany where "inflation is low and
the labour market is in good shape", higher earnings increases were
appropriate. This would help bring average wage developments in the
eurozone in line with the ECB's inflation target of close to 2%, he
said.
The Bundesbank historically has been a strong advocate of wage
restraint, but with eurozone inflation stuck below 1% and consumer
prices rising just 1% in June in Germany, Europe's biggest economy, some
fear deflation.
Bundesbank Chief Economist Jens Ulbrich was widely reported to have
encouraged German trade unions to take a more aggressive stance in wage
negotiations, given the low levels of inflation.
Earlier this month, the German Bundestag gave the green light to a
minimum wage of €8.50 per hour. The law, which will apply as of 1
January 2015, will be the first time that Germany has a minimum wage,
although some exceptions will continue to apply in certain sectors until
1 January 2017.
The move by Germany has emboldened others to call for a Europe-wide
minimum wage. France has long spearheaded the campaign for the
introduction of a European minimum wage, saying it will help tackle
unfair wage competition in Europe, or social dumping.
Labour unions in Germany have been getting above-average pay hikes in
the past year after a decade of wage restraint. In April, 2.1 million
public sector workers agreed to a 3% pay rise for this year and 2.4% for
next.
In February, Germany's 550,000 chemical workers agreed to a 3.7% pay hike for 14 months.
Source: http://www.euractiv.com
