Germanys biggest trade union strikes a deal on pay
On the whole we are pretty happy with the deal, says Stefan Wolf, boss of Gesamtmetall, the metal-engineering industrys employers association, about an agreement on pay struck on November 18th for workers in the state of Baden-Wurttemberg. IG Metall, Germanys mightiest trade union, had asked for a hefty annual pay increase of 8%. Bosses managed to buy time by granting them an increase of 8.5% spread over two years. That deal was mirrored by Volkswagen and IG Metall when they struck a deal on November 23rd.
The agreement is likely to be adopted by most if not all 3.9m workers and their employers in the countrys metal-bending companies and influence wage deals in other industries in Germany and neighbouring countries. Pay rises are now set until September 2024, giving employers much-needed certainty about at least one important aspect of their input costs.
Its on the high side, but bearable, states Holger Schmieding, chief economist of Berenberg, a German private bank. Workers will receive a 5.2% pay increase in June next year and a 3.3% raise in May 2024 and two tax-free bonus payments of 1,500 ($1,550). This is hardly keeping pace with inflation, which reached an annual rate of 11.6% in October in Germany, but looks generous considering the numerous other headwinds faced by businesses including an energy crisis, supply-chain bottlenecks and a looming recession.
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