EZA 776 Briefing Paper

29 January 2007

Germany: wage round – higher pay rises in the offing

Strengthening of the economy will be reflected in this year’s wage round. Chemical trade union IG Chemie, currently in negotiation, aims for substantially more than the 2.7% pay rise achieved last year. Similarly “flagship” union IG Metall aims to top last year’s 3% pay rise: this year’s pay demand (presented 26Feb) is expected to come in above 6%. While the outcome can be expected to exceed 3.5% in the metal working sector and 2.5% in the service sectors, focus should be on the ability to agree flexible arrangements for companies and the duration of the wage contract.

Asset conclusions: against the background of cyclical strength, flexibility of wage agreements might be more important for the ECB than the headline number.

© Graham Bishop