German workers who made sacrifices during the financial crisis say it is payback time now that the economy is thriving, company profits are climbing and unemployment has fallen below a key benchmark.
“Unions demonstrated a lot of responsibility during the crisis,” putting wage demands aside in exchange for job security, said Gernot Nerb, a specialist at the Ifo economic institute.
With annual sector salary talks approaching, workers want to make sure their efforts now pay off.
The civil service union DBB has already signaled it wants raises of “more than 7 percent.”
The biggest German trade union, IG Metall, has called for demonstrations to press its demands.
“Workers helped overcome the crisis. They now want a fair share of the growth,” a union statement said.
German Economy Minister Reiner Bruederle of the liberal FDP party even said recently that “when growth takes off, substantial salary increases are possible.”
Europe’s biggest economy is officially forecast to expand by 3.4 percent this year, equal to the rate of 2006 and the highest since German reunification in 1990.
Wage moderation has played a major role in what some German media call a second “economic miracle” following the country’s rise from the ruins of World War II.
Another key factor this time was a state-subsidized shorter working hours program that affected up to 1.4 million workers in 2008 and last year as the country plunged into its worst recession in six decades.
The plan allowed companies to keep workers on their payrolls and respond quickly to a pick-up in demand this year from emerging economies like Brazil, China and India, Nerb said.
Blue-chip groups listed on the German DAX stock index have begun to post handsome third-quarter profits, catching the attention of investors and staff alike.
German workers are in the top third in Europe in terms of wages, “but their evolution has been less favorable in the past 10 years than in other countries like France, Italy and Spain,” Nerb said.
Such wage restraint helped Germany become more competitive than its neighbors, a fact that sits poorly with more than one.
A leading beneficiary of the economic rebound and a key German employer, the auto sector has gotten a jump start on others in compensating staff.
The parts company Bosch earned unusual praise from unions last week when it said it would raise pay for 85,000 workers two months ahead of schedule.
Bosch expressed “heartfelt thanks” to its employees for their “strong loyalty,” and was quickly joined by another household name, Audi.
Porsche is preparing to follow suit, its works committee said, and staff at Daimler, which owns Mercedes-Benz are pressing for a similar gesture.
“A moderate salary increase” would be more good news for the German economy too because it would help domestic consumption build a pillar of support next to exports, said Heinrich Bayer, an economist at Postbank.
Unemployment has fallen below the key level of 3 million, to about 7 percent of the workforce, and could force even recalcitrant companies to pay skilled workers more since several sectors are beginning to report shortages.
But while they might benefit from the boom, unions underscore the plight of perpetual have-nots like unskilled and temporary workers.
“Growth will only be self-sustaining when people have fixed contracts and can live on their wages, not with an army of poorly paid workers,” IG Metall vice president Detlef Wetzel said.