Germany must increase workers’ salaries to help its neighbors out of an economic slump, the EU Commissioner for Employment, Social Affairs and Inclusion Laszlo Andor said on Saturday.
The Hungarian said Berlin’s large 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 yesterday.
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 said.
His comments come amid signs of stalling growth in the 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.
French President Francois Hollande this month said Berlin should boost spending as “the best favor Germany could do for France and for Europe” to help growth.
“It is very important that Germany increases public spending, stimulates demand and reduces its excessive trade surplus, which is hurting its European neighbors,” Andor said. “Changing wage policy is indispensable, the commission believes.”
Bundesbank President 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 German 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 next year, despite stiff opposition from employers.
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