German Wage Round for 3.8 Million May Fuel Inflation, Lobby Says

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Germany’s upcoming collective-bargaining round for 3.8 million workers in the engineering industry could fuel inflation in Europe’s biggest economy, the head of the Gesamtmetall employers’ lobby in the state of North Rhine-Westphalia warned.

“I can only warn urgently against fueling inflation even further through excessive wage agreements in the most important industrial sector for the German economy,” Arndt Kirchhoff said in a commentary published in Frankfurter Allgemeine Zeitung. “What is required is a collective bargaining policy toolbox that takes into account the extremely heterogeneous situation in the companies.” 

The executive board of Germany’s powerful IG Metall labor union will make a recommendation on the wage demand Monday, and the regional collective-bargaining chapters of IG Metall will decide their demands on that basis. A press conference is scheduled for 3 p.m. in Frankfurt. Collective bargaining will begin in September. 

The union won wage increases of 6.5% and a one-time payment of 500 euros ($525) for some 75,000 workers in the steel industry, the biggest jump in 30 years, it said on its website. That mustn’t set a precedent, Kirchhoff said.

Relief Measures

“The steel agreement can certainly not be a blueprint for the German metal and electrical industry in view of the special economic situation in this industrial sector,” he said. “Our industry as a whole is still clearly below pre-crisis levels.” 

Kirchhoff said he’s “aware that rising consumer prices are a major concern for our employees” and urged the government to provide “substantial relief.”

Germany’s ruling coalition is working on a package of measures to ease the impact of rising energy costs for consumers, the Bild am Sonntag newspaper reported, citing an interview with Greens Party co-leader Ricarda Lang. Additional government spending should be targeted to help those most in need, including pensioners on low incomes, she said.

German inflation hit another all-time high in May, adding urgency to the European Central Bank’s exit from crisis-era stimulus. Consumer prices jumped 8.7% from a year ago, driven by soaring energy and food costs, more than analysts predicted.

ECB President Christine Lagarde said after a council meeting in Amsterdam this month that inflation risks “are primarily on the upside,” also because of higher-than-anticipated wage increases, though there is no risk as yet of a wage-price spiral.