European finance ministers have issued a call for wage restraint so that inflation does not rise. The ministers – holding their regular monthly meeting – warned against excessive demands in pay negotiations, such those due to start next month in Germany.
The powerful German metalworkers union this week said it would be looking for a 6.5% raise for its 3.4 million members; that is more than three times the rate of inflation.
The finance ministers said it is natural that workers want more now that the economy is growing, but European economic and monetary affairs commissioner Joaquin Almunia warned: “The European Commission’s view is that wages must evolve in line with productivity. As productivity is now increasing, there is a larger scope for bigger wage increases where productivity increases. But that is in specific companies or sectors, not on a country wide basis.”
Focused on fighting inflation, the European Central Bank has flagged up another rise in the cost of borrowing in March but falling inflation statistics for the region make it harder for the ECB to justify pushing interest rates up again after that. There is reportedly considerable debate among the members of the central bank’s Governing Council over monetary policy for the months ahead.