Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Germany's IG Metall to Seek Raise of 7%-8% in Benchmark Pay Negotiations - Report

Published 06/30/2022, 05:58 PM
Updated 06/30/2022, 05:58 PM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Germany's biggest engineering union will seek a pay raise of between 7% and 8% in benchmark pay negotiations with employers, to stop their incomes from being eroded by the highest inflation in over 30 years, German media reported on Thursday.

Public broadcasters in two of Germany's largest states, Bavaria and Lower Saxony, cited local union officials as saying that they will strive for a settlement in the 7%-8% range, despite the pressure on corporate profit margins from surging energy costs and other disruptions linked to the pandemic and Russia's invasion of Ukraine. 

Regional wage commissions at IG Metall across various states are making their proposals to the union's national headquarters on Thursday. The national HQ in Frankfurt will then adopt a formal decision on July 11th. Formal negotiations with employers will then take place after the summer.

Settlements tend to be typically considerably lower than the union's initial claims. As such, it's unlikely that the final figure will match the 7.1% average inflation figure that the Deutsche Bundesbank is forecasting for the German economy this year.  Negotiators for the glass-workers' chapter of IG Metall recently agreed to a 4.7% increase for the coming year.

IG Metall's wage settlements are important because they serve as a benchmark for others in the private sector in Germany. They thus have a significant influence on overall wage inflation in Europe's largest economy, even though that significance has weakened during two decades of extraordinary restraint due to deindustrialization and the offshoring of many manufacturing jobs to central Europe. The pace of change in German wages is in turn a key consideration for the European Central Bank's assessment of overall inflation dynamics in the Eurozone.

IG Metall is preparing to present its demands at a time when the German economy is coming under increasing stress with regard to energy supplies. Russia has cut its shipments of natural gas to the country by 60%, causing the government to declare a state of 'alarm' and initiate emergency planning for the coming winter. Uniper (F:UN01), one of Germany's biggest energy suppliers, said late on Wednesday that it is in talks with the federal government for a bailout, as it is losing money due to its inability to pass on the cost of gas that it is buying at record high prices to cover its shortfall from Gazprom (MCX:GAZP).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.