German public sector workers secure substantial pay rise
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Germany’s public sector workers have secured a substantial pay rise that many expect that it will spur consumer spending and buoy growth.
The Financial Times reports that the rise, spread out over the next three years, is the latest sign that record-low unemployment in the eurozone’s economic powerhouse has begun to boost pay. This development effects a million German public sector worker and comes after a series of bumper pay deals in the past two years for German workers.
The deal comes as the European Central Bank’s monetary policymakers are to meet in Frankfurt this week to unveil forecasts that will almost certainly show weaker growth for this year. This is partly due to the weakness in German exports. Growth is now at its lowest level in four years and officials hope that the latest pay rises will boost consumer spending.
The pay rise was brought about after unions representing the public sector workers agreed to pay rises by 8.8 per cent over the next three years
The deal covers workers in all German regions except the state of Hessen.
The Financial Times highlights that economists are banking on better pay rises boosting growth in Germany at a time when the country’s €1.5tn export machine is under pressure from weak global demand and political uncertainty.
