German construction workers agree two-stage wage rise

[BERLIN] About 785,000 German construction workers agreed a wage rise with employers early on Wednesday, employers and union officials said, the third significant pay-hike agreed in recent weeks in Europe's biggest economy.

With Germany relying increasingly on domestic demand rather than exports as a growth driver, its pay deals are closely watched. Last year, real wages rose 2.4 per cent, their fastest pace since 1992, due to robust pay deals and low inflation.

Under the agreement, reached after 14 hours of talks, employees in western German states will get a rise of 4.6 per cent and in eastern states 5.3 per cent. The deal lasts 22 months.

IG Bau construction union had demanded a wage increase of 5.9 per cent for its workers. Originally, employers had offered a two-stage hike of 3.1 per cent for workers in the West and 4.5 per cent for workers in the East.

IG Bau negotiator Dietmar Schaefers said talks were extremely difficult.

"The result is a compromise which was not easy for either side. The talks nearly broke down several times," he said.

Employers said they had gone a long way to accommodate the union.

"Our employees will get a significant rise in weal wages due to low inflation," said employer negotiator Frank Dupre.

Since reunification in 1990, German has adopted wage restraint which has helped keep inflation in check and unemployment relatively low, particularly in the last few years.

In April, German consumer prices, harmonised with other European countries, fell 0.3 per cent on the year and the jobless rate remained stable at 6.2 per cent on a seasonally adjusted basis.

But last week, the country's biggest trade union, IG Metall, agreed a landmark deal with employers giving 3.8 million workers in the metalwork sector a two-stage pay rise of 4.8 per cent over 21 months.

At the end of April, more than 2 million public sector employees clinched a 4.75 per cent wage hike over this year and next.

REUTERS