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Germany's IG Metall wants 7 to 8 percent raise

The leadership of Germany's largest industrial union, IG Metall, on Monday endorsed a demand for a pay raise of between 7 and 8 percent for its metal and electric industry members — the highest increase sought in 16 years.
/ Source: The Associated Press

The leadership of Germany's largest industrial union, IG Metall, on Monday endorsed a demand for a pay raise of between 7 and 8 percent for its metal and electric industry members — the highest increase sought in 16 years.

"This demand range takes into account the complete economic situation and takes into account the expectations of employees," said IG Metall chairman Berthold Huber at a press conference after the union's directors approved the recommendation of regional tariff commissions.

The union will not begin actual negotiations with industry leaders until October, but the employers' association has already indicated it is not prepared to meet the demand amid slowing order backlogs and weakening economic outlooks across Europe and the world.

On Oct. 31, the union's current contract expires and warning strikes — should the union's demands not be met — could ensue as early as the next day, Nov. 1, IG Metall said.

The union said a pay raise for members would help the domestic economy, as it expects a 1.5 percent gain in productivity and a 2.5 percent decline in inflation next year.

Huber said a pay raise of that level for the union's employees had to do with "more justice and more growth."

The move comes despite recent European Central Bank warnings of negative economic impacts from labor groups negotiating wage increases in light of high inflation.

Last week, the European Central Bank warned pay raises in response to higher consumer prices can worsen inflation. Known as second-round effects, the higher wages can drive up costs and therefore prices, limiting further business expansion, competitiveness, overall employment and economic growth.

Inflation reached a record 4.1 percent in July in the 15 countries that use the euro.

"Broad based second-round effects stemming from the impact of higher energy and food prices on price and wage-setting behavior must be avoided," ECB president Jean Claude Trichet said during his monthly meeting remarks.

Trichet said inflation-targeted wage increases would be detrimental to the euro zone's economy, which is hamstrung by high commodity prices, low consumer confidence and demand, and low investment growth.

"The Governing Council calls for these (pay) schemes to be abolished," Trichet said.

Last year, the union demanded a 6.5 percent increase but settled for 4.1 percent with another 1.7 percent increase this year.

IG Metall counts some three million members in the electric, textile, wood, plastic, automobile, iron and steel industries.

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On the Net:

http://www.ecb.int

http://www.igmetall.de