German IG Metall union to demand at least 7% pay rise – Sueddeutsche

BERLIN (Reuters) – Germany’s IG Metall union, which represents industrial sector workers in Europe’s biggest economy, will demand a pay rise of at least 7% in the forthcoming wage round, the Sueddeutsche daily reported on Friday.

“We need a hefty wage rise,” the newspaper quoted IG Metall chief Joerg Hofmann as saying.

According to the accepted wage formula, Hofmann put together the European Central Bank’s target inflation of 2% with a 1.1% productivity increase over two years, which comes to more than 6%, the paper quoted him as saying.

“On top of that, a redistribution component is needed as companies are making such high profits,” he said.

Together, that comes to 7% or more, he said, adding that the coming wage talks would cover two years.

IG Metall will present its official wage demand on June 20, said the newspaper.

Hofmann said the union would not trigger a wage-price spiral.

“You see that as we are taking the ECB’s 2% target for inflation as a benchmark and not the actual inflation of almost 8%,” he said.

With euro zone inflation at a record-high 8.1% and still rising, the ECB fears that price growth is broadening out and could morph into a wage-price spiral.

The European Central Bank ended a long-running stimulus scheme on Thursday and said it would deliver next month its first interest rate hike since 2011, followed by a potentially larger move in September.

(Reporting by Madeline Chambers; editing by Grant McCool)