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German workers demand higher pay rises than 2006, poll shows

German workers say pay increases this year should exceed raises granted in 2006, with manual workers spearheading the push for higher wages, a poll showed.

Three-quarters of blue-collar workers such as assembly line staff want wage growth to be higher this year than last, compared with 62% among white-collar workers such as office staff and 59% among civil servants, according to the poll by opinion researcher Forsa for Stern magazine. Among the self-employed, 42% are in favor of higher pay increases while 49% reject them, Stern said. The survey of 1,008 people on February 8 and February 9 has a margin of error 3 percentage points. The poll results give backing to labor unions' push for better pay packages than last year as the economy shows few signs of cooling after expanding at the fastest pace in six years in 2006. That may heighten concern at the European Central Bank, which has warned that more money in people's pockets may spur inflation. „Stronger than currently expected wage developments pose substantial upward risks to price stability,” ECB President Jean-Claude Trichet said February 9 at a briefing in Frankfurt. „Our message is a strong, strong message.”

German executives see more scope to lift pay this year, the Handelsblatt newspaper reported today, citing a separate poll. Almost two-thirds of 800 managers surveyed said they considered a pay increase of 2% or more to be justified this year, compared with only a fifth in the same survey last year, Handelsblatt said, citing a Psephos poll. The German economy, Europe's largest, expanded 2.7% in 2006 after growing just 0.9% in 2005. The Berlin-based DIW economic institute yesterday raised its forecast for growth this year to 2% from 1.8%, citing „a distinct improvement in the labor market,” the Berliner Zeitung newspaper reported yesterday.

Wage negotiations are starting today for 587,000 workers in the construction industry, with the IG BAU labor union demanding 5.5% more pay. IG BAU last won a pay increase of 1% for western German workers. Workers in the east got no pay rise. IG Metall, Germany's biggest labor union, is demanding a 6.5% pay increase for its members this year in a claim that has yet to be finalized. It won a 3% wage increase in 2006 after demanding 5% for as many as 3.4 million workers at employers such as DaimlerChrysler AG and Siemens AG. The IG BCE union wants „real wage increases” for 561,000 chemical industry workers, saying productivity gains and expected inflation should be part of the equation. Restaurant and hotel workers should get between 4% and 5.5% more pay, the NGG labor union said. Germany's inflation rate in 2006 was 1.7%, while the ECB's inflation ceiling is just under 2%. The country's six leading economic institutes in October said inflation will accelerate to 2.3% this year, boosted by an increase in value-added tax on January 1 to 19% from 16%. (Bloomberg)