Europeans urged to show wage restraint
Workers from the DaimlerChrysler plant in Sindelfingen near Stuttgart, Germany, demonstrate in support of a 6.5 percent wage rise in 2002. Axel Seidemann/Bloomberg News |
The message from euro zone ministers came at a time when the European Central Bank is raising interest rates in the euro zone to ward off inflation and warning against excessive demands in pay negotiations such as those starting now in Germany.
The call for wage restraint came on the day the powerful German metalworkers' union demanded a 6.5 percent raise more than three times the rate of inflation for 3.4 million workers in the metals and engineering sectors.
Ministers from the 13 countries sharing the euro single currency issued a collective warning at a news conference late on Monday, in what looked like a clear endeavour to reassure the ECB as it considers further rate increases.
Jean-Claude Juncker, chairman of the euro group, said it was natural to want a bigger slice of the cake now that the economy was growing solidly, but wage awards should remain in line with productivity gains.
"Wage developments must be in line and in conformity with productivity gains. There is more to this than just salaries," the Luxembourg prime minister said, adding that talks should focus not just on pay but on job creation and profit-sharing.
Southern discomfort
Officials said ministers were most worried about wage rises relative to productivity in southern countries such as Portugal, Greece and, above all, Spain, the fourth-biggest economy in the currency bloc after Germany, France and Italy.
Germany's IG Metall union is seeking a big hike after years of restraint as pay negotiations for nearly a quarter of the nation's 39 million workers get going.
Analysts expect IG Metall to ultimately settle for around 4 percent, not judged excessive in a country with inflation well below the 2 percent mark. But they are watching to see if others push for more than usual in other sectors.
Meanwhile, employers have raised the spectre of job cuts if wage demands are too steep.
Earlier this month, employers signalled they did not want wage rises this year to exceed the 3 percent deal agreed last year.
"The last wage deal was already too high," the head of the VDMA machine tool makers' association, Dieter Brucklacher, said in a recent interview.
Several ministers in Brussels echoed the message Juncker was charged with conveying after talks that were also attended by ECB chief Jean-Claude Trichet.
The European Commission predicts inflation of 1.8 percent this year after 2.2 percent last year, pushing price growth below the ECB's tolerance level of 2 percent.
Agencies
(China Daily 02/28/2007 page16)
