Germany - wage alert.
On 10 Dec 05 IG Metall, the leading union in German industry, pre-announced a claim of “up to 5%” for the 2006 wage round, at the top end of expectation. Despite containing bonus payments – worth 1% of the total – the claim reflects traditional IG Metall bargaining strategies and politics. Although the wage round will only heat up in Feb/Mar06 the claim sends a negative signal to other unions in the euro area and to the ECB. On balance it will exacerbate dismissal pressure rather than inflation pressure, in particular, if it coincides with a recovery of the euro.
SummaryEZA Conclusion: bad for consumer related stocks (as wage claim will heighten uncertainty for jobs and consumption); potentially positive for the euro.
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© Graham Bishop
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