German union presses for wage rise in chemical sector

IG BCE calling for increases of 5 per cent
||Last Updated: 04/08/2016

BERLIN (Reuters) — Germany's IG BCE union said on Friday it would seek wage increases of five per cent for the more than 550,000 workers in the chemicals sector after the economy

grew at its fastest rate in four years in 2015.

But the BAVC employers group rejected the demand, arguing that sales in the chemical sector were expected to stagnate this year. "The economic situation in our sector doesn't allow any big jumps," BAVC managing director Klaus-Peter Stiller said.

Trade unions argue that solid wage increases will help bolster domestic spending in Europe's largest economy as its export engine, once a reliable growth driver, stutters amid a global economic slowdown.

"The German economy is growing steadily, Europe remains on a recovery path ... the chemicals sector is benefiting from this," the IG BCE union said in a statement, adding it was a matter of fairness to raise pay for workers.

The wage negotiations for the chemical industry workers, including staff from BASF and Bayer, are expected to start on May 30 in the state of Hesse.

Germany's biggest union, IG Metall, has demanded wage increases of five per cent for 3.8 million metals and electrics sector workers.

An even bigger pay hike of 6 per cent was demanded by the Verdi union for more than 2 million workers in the public sector. Interior Minister Thomas de Maiziere rejected this as "unrealistic and exaggerated".

The wage negotiations will take place in a buoyant labour market. In March, the unemployment rate held steady at 6.2 per cent, remaining at a post-reunification low.

Thanks to the strong labour market and record-low inflation, real wages in Germany have risen last year at the strongest rate since 2008, in a boost to private consumption which has become the main driver of growth in Germany's economy.

In 2015, the gross domestic product (GDP) grew by 1.7 per cent, with domestic demand nearly being the sole driver of growth while net foreign trade only contributed little.

This year, the government expects growth to be entirely domestically-driven. Net foreign trade will only hinder the expansion, with overall exports hurt by waning demand for 'Made in Germany' goods from emerging markets such as China.

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