EU pleads with Germany to let wages rise

AFP - [email protected] • 17 Aug, 2014 Updated Sun 17 Aug 2014 13:04 CEST
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Germany must increase workers' salaries to help its neighbours out of the economic slump, the European Union's employment commissioner Laszlo Andor said Saturday.

The Hungarian said Berlin's big foreign trade surplus was hurting its European partners, and urged it to stimulate domestic demand by increasing wages and public expenditure.

"The rise in salaries has fallen behind the rise in productivity in Germany" for more than a decade, Andor told the German conservative daily Die Welt, in an interview due to be published on Sunday.

Brussels was now urging Germany, the EU's economic powerhouse, to relax its iron grip on wages, which he said was "indispensible" for the recovery of the rest of the region.

"It would be better if salaries rise in parallel with productivity," Andor added.

His comments come amid signs of stalling growth in the 18-member eurozone, particularly its largest economies Germany and France, as the bloc struggles to recover from years of financial crisis.

Brussels now appears to be taking a view long championed by France that a rise in German salaries would give the struggling eurozone a much-needed stimulus.

France's President Francois Hollande this month called on Berlin to boost spending as "the best favour Germany could do for France and for Europe" to help growth.

"It's very important that Germany increases public spending, stimulates demand and reduces its excessive trade surplus, which is hurting its European neighbours," Andor said.

"Changing wage policy is indispensible, the Commission believes," he told the paper.

Bundesbank chief Jens Weidmann last month said German wages have scope to rise as much as 3 percent because "we are practically in a situation of full employment".

This runs counter to many on the German right, including Chancellor Angela Merkel, who believe its low wage policy has given the country its competitive edge.

Pay remains a prickly issue in Germany, which has just approved its first national minimum wage to come into effect in January 2015, despite stiff opposition from employers.



AFP 2014/08/17 13:04

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