Employers try to lower pay expectations

With more than two months until the current agreement in the German metalworking industry runs out, the metalworking union IG Metall has already clashed with the employers' association Gesamtmetall over what would be an acceptable increase.

Martin Kannegiesser, head of Gesamtmetall, said this month that the union should be prepared to accept a below-inflation increase. "At a time when the economy is scarcely growing and five million people have no job, we can't talk about taking a big swig out of the bottle," he said.

Kannegiesser is calling for an increase equivalent to no more than the increase in productivity, which currently stands at 1.4%. The rate of inflation has recently been running at more than 2%.

Unsurprisingly, IG Metall takes a different view. Its Baden-Württemberg region, which traditionally sets the pace in pay negotiations, is seeking an increase of 4.5% to 5.0%.

Jörg Hofmann, who heads the union in Baden-Württemberg, points to the employers' high profits and argues that a pay rise would boost demand and employment. "The best guarantee that production stays in Germany is an increase that supports purchasing power and growth at home", he said.

Covering 3.5 million workers, the metalworking agreement is one of the most important in Germany. The current 26-month agreement runs out in February.