Sunday, May 20, 2012

Euro zone row gets fat pay rise for German workers

(Reuters) - A record-breaking pay deal will give millions of German workers their biggest rise in wages in two decades, boost consumption in Europe's biggest economy and help towards adjusting the regional imbalances that have caused severe tensions within the euro zone, analysts said on Sunday.

Germany's largest industrial union IG Metall agreed to a 4.3-percent pay rise from employers just before dawn on Saturday -- giving the 3.6 million car and engineering industry workers their biggest wage increase since a 5.4 percent deal in 1992.

The eye-catching 4.3 percent increase in the headline number will cover the 12 months from May 1 to April 30, 2013, union officials said. The agreement that ends a series of disruptive strikes takes effect from April 1, 2012 but will encompass a 13-month period. Workers will get no raise for April 2012.

The highest wage increase in two decades was agreed after German political leaders broke a long-standing, self-imposed taboo of staying out of wage talks and instead repeatedly called for strong pay rises. Read More