Commissioner calls for wages to rise in Germany

European Commission believes a change in wages would have a positive effect on neighbouring countries.

László Andor, the European commissioner for employment, social affairs and inclusion, has called on Germany to ensure that wages rise according to productivity levels.

The European Commission believes that if Germany relaxes its grip on wages, it would boost economies in the rest of the eurozone. “It is very important that Germany increases public spending, stimulates demand and reduces its trade surplus, which is hurting its European neighbours,” Andor said in an interview with the newspaper Die Welt on 17 August.

According to Andor, the rise in wages has fallen behind the level of production: a situation that has not been addressed for ten years. “Germany plays an important economic role in Europe and therefore has a responsibility as well,” he said.

Andor said that it is not the Commission’s intention to intervene in national wages policy, but it is concerned about mismanagement – a development that the Commission will monitor closely.”

In July, the German parliament adopted a law to introduce a minimum wage of €8.5 an hour – it will come into force in 2015.  The law was a precondition of the social democrats forming a governing coalition with the centre-right Christian Democratic Union. Germany is one of the few member states without a fixed minimum wage – although fixed salaries exist in some industries.

Many German politicians believe that this policy, along with labour market reforms, have helped boost the economy. The country has the lowest level of unemployment in Europe, at 5.1% in June. Figures published by Germany’s federal statistics office last week showed a slight decrease of 0.2% in economic growth, the first drop for two years.

The Bundesbank fears a further decrease. In a report on Monday (18 August), it expressed concern about geopolitical developments and the possible effect on the economy.

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