IG Metall agree a 4% wage rise for 72k steel workers in Northern Germany
IG Metall is the largest workers union in Germany with in excess of 2m members. They mainly look after German industrial and manufacturing workers and the wage negotiations are usually a hot affair.
This year IG were pushing for 4.5% hikes and were threatening strikes a few days ago after steel workers were offered 1.3%. One of the main reasons IG put up a fight was due to inflation in Germany.
"An offer that is below the inflation rate and leads to a drop in real wages is out of the question and not negotiable. Therefore it's the employers who bear responsibility for the escalation of the labor dispute" Said IG's chief negotiator.
They they settled on a 2.3% raise for 2016.
IG also got a 4.4% wage rise for 100k workers in the textile and clothing sector last week.
Last month, the 16 German federal states agreed a two-stage wage increase of 4.35% over two years for over 2m civil servants and public sector workers.
And yet here we have Draghi telling us that inflation is temporary!! As we like to say here in the UK, "Pull the other one, it's got bells on".
It's news like this that makes a mockery of the ECB's stance on inflation but I maintain that it's win win for Draghi. Right now, the market believes his call and that's keeping the euro contained. If inflation does become sustainable, he will proclaim that ECB policies have worked. As I've also maintained, prices rise quicker than they fall, and this pay news goes a long way to proving that. As we all know, firms will raise selling prices to cover the hikes, and that's on top of an industry that is already finding input prices rising.
Expect the inflation alarm bells in Germany to be ringing ever louder, and they'll be heard at the ECB too.
