The Fundamentals

Why German wage hikes could please Trump

mainb 0200160084 Evan Vucci DPA – US president Donald Trump trade fire fighters gesturing car auto Germany surplus
Give me a trade surplus that's only this big. Source: AP

German unions are ramping up the pressure on employers to pay big wage hikes this year, and as the economy is booming, companies will find it tough to argue for restraint. With order books brimming and unemployment in Germany last year hitting its lowest level since unification in 1990, employees in several major industries will campaign for a piece of the pie in 2018.

Leading the way are staff at VW’s sports-car brand Porsche, who on Thursday staged a walk out in support of a campaign by the country’s biggest union, IG Metall, for a 6 percent pay hike for some 3.9 million workers in the auto and engineering industries. The union set a high benchmark with its claim, and the chemical industry will likely be confronted with a hefty demand when talks get underway this summer. Pay negotiations are also scheduled for the public sector and construction workers.

“Wages haven’t developed badly of late,” said Enzo Weber, an economist at the Institute for Employment Research, a unit of the Federal Labor Office. “But if you consider how strongly employment has grown and unemployment has fallen, more hikes are feasible.”

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