On Fri, 27 Aug 2010, Michael Perelman wrote:
> I would expect that wages would start to increase if business is hampered
> by labor shortages.
Well FWIW labor demands are increasing. See FT article appended below.
I love the part where German unions frame higher wages as a stimulus program, as just the boost in domestic demand that Germany's trading partners are demanding -- and where this is reported in the news, and politicians are asked about it. They have their own cheesy politics -- every country does -- but I sure would like a public discourse like that.
Michael
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http://www.ft.com/cms/s/0/7caa34fc-b20a-11df-b2d9-00144feabdc0.html
August 27 2010 Financial Times
Recovery spurs German union demands By Gerrit Wiesmann in Berlin
German industry on Friday faced up to the prospect of difficult pay negotiations when the powerful IG Metall union demanded a 6 per cent pay rise for the country's 85,000 steel workers, as a pay-off for economic recovery.
"It's time all employees profit from the upswing," said Oliver Burkhard, the head of IG Metall in North Rhine-Westphalia, the country's main steel-producing region, pointing out steel workers' restraint during the global crisis.
While big wage rounds begin only next spring, with talks for the 420,000 chemical workers, companies are already wary of collective-bargaining agreements in small sectors that may set standards for much larger industries.
The German economy expanded by a stellar 2.2 per cent in the second quarter, thanks to a strong export performance and an uptick in domestic demand -- and economists now expect full-year growth of gross domestic product of 3 per cent.
The situation is a far cry from the economic contraction early last year. Steel workers then agreed to a 2 per cent wage rise for 2009 -- little more than an adjustment to take account of inflation -- after initially demanding 4.5 per cent.
Many sectors in succeeding months showed even more restraint, an attitude which helped companies avoid lay-offs. This in turn held up domestic demand and enabled industry to respond quickly to new orders this spring.
But Mr Burkhard on Friday signalled IG Metall now wanted to change tack. He said: "After successful crisis-management we need a demonstration of a good hand in managing the recovery together with the steel workers."
Union leaders in recent weeks have started pushing the case for wage rises to stimulate domestic demand -- a missing complement to German export-led growth, as US and French governments have also recently bemoaned.
Readying to make a pay demand for 4.4m public-sector workers later this year, Frank Bsirske, head of services union Verdi, called wage increases "a key instrument" for "stimulating demand and fostering sustainable growth".
But employers counter that even the strong growth rates recently seen have not yet returned the economy back to where it was when crisis broke in late 2008, and they note that economists are warning that German growth will prove more moderate next year.
Accordingly, the steel employers' federation called the union's demands "impossible to fulfil". Bernhard Strippelmann, managing director, also said that employers would resist a demand to pay union rates to temporary workers.
IG Metall said the union would try to transfer successes in the steel industry to the 3.4m workers in the metal-working and electronics sector. But their current wage agreement runs until 2012, something of a stroke of luck for car and machine manufacturers.
They agreed a two-year deal at the start of 2010, consisting of a one-off payment and a pay rise of 2.7 per cent in April 2011. But IG Metall recently called on employers to bring forward the April pay rise, given the recovery.