MNI: Germany's IG Metall Says Wants Single-Installment 7% Rise

MNI ((MNI) LONDON) - MNI (LONDON) - Germany’s largest industrial union will demand a pay rise of more than 7% to be delivered in a single instalment for 3.9 million metal workers in wage-setting negotiations set to begin in the autumn, a spokesperson for IG Metall told MNI. 

Employers must “respect the reality” of the impact of permanently higher prices in September’s talks, which serve as a benchmark for wage increases throughout Germany, the spokesperson said in written responses to questions, adding that workers need significant real pay gains to support a consumer-driven recovery for the country.

While in recent years discussions have resulted in a mixture of smaller pay rises and one-off supplementary payments, this time the 2.2-million-member metalworkers’ union wants a larger, single increase, with the exact figure calculated according to inflation, increases in productivity, and an additional redistributive element.

“In the last collective wage agreement, two one-off payments also contributed to real wages exceeding inflation," the spokesperson said. "Even if inflation rates fall, prices remain at a high level. With the 7% increase for monthly salaries, we are demanding a real wage increase.”

WAGES AND THE ECB

The pace of euro area wage gains will be key for determining the pace of European Central Bank rate cuts, with the ECB saying in June that average euro area pay increases will increase to 4.8% this year, before falling back to 3.2% in 2026. The Indeed salary tracker rose to 4.2% last week. (See MNI SOURCES: Even ECB Hawks Confident Inflation On Track)

IG Metall chair Christiane Benner has called for a “disproportionate” increase in pay for those worst affected by rising costs of living, and for firms to better address employees’ work-life challenges, such as childcare.

“Rising prices affect almost the entire basket of goods and services for employees,” the spokesperson said. “In particular, our colleagues in the lower pay groups are hit even harder by the increased prices. We would therefore like to talk to employers about a social component for them.”

Economic research institutes agree that private consumption must now be a major economic pillar of Germany’s recovery from the Covid and energy shocks, the spokesperson said.