Well, that was unexpected.
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Normally, the last thing safe, conservative, can we even say staid, German politicians do is pitch head first into domestic wage negotiations, preferring to stay grandly above the fray until the dust settles.
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But wade straight in is just what immensely powerful German Federal Minister of Finance, Wolfgang Schauble, has done this week, arguing the country’s stubborn resistance to the rest of Europe’s economic woes, could set the agenda for wages starting to rise.
Schauble has potentially lit the fuse to a debate that seems to be gathering steam in Germany as unions – which have by and large gone along with swingeing productivity improvements – look to capitalise on a plethora of good news from homeland automakers and suppliers.
As first quarter results continue to pour in, it’s Germany bucking an overall gloomy European landscape that has seen automakers slash forecasts and predict huge cuts in capacity.
Only this week, Volkswagen Group said it delivered 2.89m vehicles to customers in the first four months of this year, up 8.6% and outperforming a global market that rose by 6%. And Audi delivered 471,300 vehicles worldwide from January to April, an increase of 11.7%, while enjoying continued strong growth in China, where 124,300 vehicles were delivered, up 41%.
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By GlobalDataThat’s just for starters – BMW Group sales in April rose 6.1% year on year to 145,505 vehicles delivered worldwide, while deliveries increased 9.8% to a record 571,040. Daimler too posted some impressive numbers.
Step forward Herr Schauble, whose comments have provoked a storm of controversy this week in Germany in the light of immensely powerful metalworkers union, IG Metall’s demands for a 6.5% pay rise.
“He [Schauble] said in very general terms, Germany could afford some wage increase – he did not mention the demand of IG Metall,” a spokesman for the Finance Ministry told just-auto from Berlin.
“Germany could afford some wage increase because [it] is very competitive. Having said that, we should never do anything that should undermine this competitiveness. It was not a comment that named a company or demand of either side.”
Schauble is a member of Germany’s CDU party – the same as Chancellor Angela Merkel – although it’s not known what his boss thought of the pay remarks.
But if the Finance Minister – effectively the second most powerful politician in Germany – believes – no matter how many caveats he laces it with – the country can dip into its pockets – that is a pretty strong card for IG Metall to play.
The Frankfurt-based union told me today (11 May) it had left its 6.5% pay demand until last on its list of demands to be thrashed out at talks next week – but the Finance Minister’s comments can only have strengthened its bargaining position.
But at least Schauble expressed what many have been thinking. At at time of almost universal austerity in Europe, when the only game in town appears to be that of cutting cloth, the Finance Minister is being refreshingly honest.
“It is very unusual for a federal politician to comment on wages,” said the Finance Ministry spokesman. “The government has nothing to do with it.”
That’s as maybe, but while the German government might not directly reflate the domestic economy, any pay increase of the magnitude IG Metall is demanding, could just kick-start a trickle-down effect for its beleaguered neighbours as consumption could – even – rise.
