(Bloomberg) -- German public-sector workers won’t moderate their pay demand just because the economy is headed for another contraction this year, according to Verdi union chief Frank Werneke.
The current weakness is due to the “excessive orientation” toward certain export markets like China and not because of high wages, Werneke told Deutschlandfunk in an interview. He spoke ahead of a press conference later on Wednesday in which the union will announce how big a pay increase it’s seeking for 2.5 million workers at the federal and municipal level.
“It’s certainly not the case that public-sector employees will be the ones to suffer as a result of this misguided decision,” Werneke said. “Quite the opposite. The task of wage policy in all sectors, including the public sector, must be to strengthen purchasing power in order to at least have domestic demand as a stabilizing factor.”
The comments suggest that negotiations for one of Germany’s biggest pay deals may become confrontational at a time when the economy may well shrink for a second year in a row. Industrial firms in particular are suffering from subdued demand abroad as well as structural problems at home, including high energy costs and excessive bureaucracy.
Workers in the manufacturing sector are still demanding a pay hike of 7%, which employers have called unrealistic in the current environment. Karin Welge, who’ll represent the municipalities in the public-sector talks, has also said such a strong increase wouldn’t be appropriate because of tight budgets and inflation close to the 2% goal.
The German wage negotiations are a key test of the European Central Bank’s assumption that a substantial slowdown in pay growth next year will help bring price growth back to the target in a sustainable manner.
Werneke signaled that working time will be part of the negotiations, saying long hours pose a competitive disadvantage to the public sector in attracting staff on a tight labor market.
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