German industry: economic adviser backs calls for significant wage rises

An economic adviser to the German government on Sunday backed a union's call for industrial workers in Europe's biggest economy to get significant pay rises.

Economist Peter Bofinger argued in an article for the Bild am Sonntag newspaper that wages should go up by 3 percent next year. His comments came after a key regional branch of the IG Metall industrial union said last week it was considering a demand for a hike of between 4.5 and 5 percent.

That demand "is partly a negotiating tactic, but it goes in the right direction," wrote Bofinger, a member of the government's five-member independent advisory panel who was proposed by German unions.

"Wages should in any case be raised by about 1 percent for progress in productivity and offer an inflation offset of about 2 percent," he said, maintaining that a raise is needed to boost sluggish consumer spending.

IG Metall argued last week that the outlook for industry is good, while also pointing to future government plans to increase value-added tax and cut subsidies.

The union branch in the southwestern state of Baden-Wuerttemberg, an industrial heartland, is to finalize its pay demand in mid-January ahead of negotiations in February. Employers have described its initial suggestion as excessive.

Industrywide pay deals struck in Baden-Wuerttemberg traditionally set the pattern for the rest of Germany, AP reports. P.T.