Wage Talk

Outmaneuvered by Bundesbank on Wages, Union Chief Says Labor Demands Robust

Kampagne für Mindestlohn ohne Ausnahme
Reiner Hoffmann, the head of the German Federation of Unions, campaigns for a minimum wage with no exceptions.
  • Why it matters

    Why it matters

    In an usual step, the Bundesbank is encouraging unions to make aggressive wage demands to dampen deflation, A union leader, Reiner Hoffmann, said members don’t need the central bank to tell them what to do.

  • Facts

    Facts

    • Collective bargaining rules govern wage talks in many industries in Germany, and it is up to the unions and employers to reach a deal
    • Workers pay a nominal 42 percent maximum tax rate, while investment income is taxed at a 25 percent rate. This is unfair, Hoffmann said.
    • Unions have been fighting for a nationwide minimum wage of €8.50, without the student and other exceptions in the current law.
  • Audio

    Audio

  • Pdf

DGB Chairman Reiner Hoffmann is very familiar with Handelsblatt. As a student, he worked as an intern in the newspaper publisher’s sales department, which he describes as “mindless work, but well-paid.”

Mr. Hoffmann sat down for a two-hour conversation with us at DGB headquarters in Berlin before heading off for an important appointment: a haircut in the city’s Prenzlauer Berg neighborhood. He then went on to debate the minimum wage with the hairdresser on “Maybrit Illner,” a talk show on Germany’s ZDF television network.

Handelsblatt: Mr. Hoffmann, have you thanked the Bundesbank in Frankfurt yet?

Mr. Hoffmann: Why should I? There is no reason for that.

The central bankers are advising the unions to abandon their restraint in the next bargaining round. It gives you a new line of attack.

Management and labor don’t need any guidance on wage policy. After all, we still have free collective bargaining.

The monetary watchdogs are essentially accusing you of being too docile.

Nonsense! The supposed restraint in Germany when it comes to wage policy is really a fiction. Just look at our agreements in the metal and chemical industries since the turn of the millennium! In these sectors, where Germany is a very strong competitor, we have always taken advantage of our position to make sure all workers benefit. There have been a few aberrations but overall, we have done very well in the last decade, when you take price increases and productivity into account. It’s a different story in a number of service professions, which employ large numbers of part-time workers or staff with short-term contracts. There is less organization, which weakens our position in bargaining rounds.

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