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German inflation rose more than workers' salaries in 2006

Monthly pay for employees in the public sector and in the manufacturing industry rose 1.2% in 2006, the lowest in 11 years while workers' hourly wages gained 1.5%, the Federal Statistics Office in Wiesbaden said today.

Consumer prices advanced 1.7% on average last year. The report adds ammunition to workers' call for a pay rise when they sit down with employers to negotiate new wage accords. Union officials argue that keeping a lid on wages over the last decade helped companies post rising profits, fueling the fastest economic expansion in six years. „It's high time that this year workers' income situation will finally improve,” said Michael Sommer, head of the DGB trade union umbrella group. „That is also possible on the back of the strong economy.” Juergen Peters, head of IG Metall, Germany's largest trade union representing 3.4 million workers, said January 24 that a wage claim of as much as „7% or over are the figures we're talking about.”

Employees working at railway services companies and firms making trains had the highest increases in monthly pay last year, at 4.5 and 3.8% respectively. Those working in construction, energy services and retail had the lowest increases. Public sector pay was flat in 2006, the statistics office said. Workers at aerospace companies and office equipment makers obtained the highest wage increases with 4.8% and 3.2%. Average hourly pay fell in the construction and the wood processing industries, as working time was increased without compensation, according to the statement. The German economy, Europe's largest, expanded 2.5% last year, the fastest since 2000 when it gained 3.2%. (Bloomberg)