German employers' body says high pay rises threaten competitiveness

Real wages posted largest increase in 2014

BERLIN (Reuters) — German industry can ill afford further strong increases in workers' pay, after substantial rises last year, because that could endanger the country's competitive position, the head of the German employers association (BDA) Ingo Kramer said on Sunday.

Even though rising wages are fuelling consumption and German growth, Kramer told Welt am Sonntag newspaper overly generous pay increases in coming wage talks would be harmful because many companies will not be able to remain competitive.

"The competitive position of many companies has improved considerably in Germany," Kramer said. "We can't endanger this competitive advantage with pay increases that many companies won't be able to afford in the long run."

Rising wages in Germany have helped spur growth in Europe's biggest economy and have general backing by political leaders.

German real wages posted their largest increase in 2014 since the data was first collected in 2008, Germany's statistics office said in March. Real wages rose by 1.7 per cent on the year. They had fallen by 0.l per cent in 2013.

A full-time worker in Germany earned an average of 46,575 euros (C$62,914) before tax in 2014, including special payments, the data showed.

Nominal wages jumped by 2.6 per cent compared with the previous year — far more sharply than consumer prices, which were up by 0.9 per cent during the same period.

In February IG Metall, Germany's biggest trade union, won an inflation-busting 3.4 per cent pay increase that benefited 3.7 million workers.

Welt am Sonntag said that wages in Germany in 2014 were, however, still below the level in 1995 on an inflation-adjusted basis even though pay increases in 2012, 2013 and 2014 outpaced the rise in company profits in those years.

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