Germany must improve wages and welfare, French minister says

PARIS Fri Nov 16, 2012 3:47am EST

PARIS (Reuters) - France's industry minister urged Germany on Friday to do more to promote economic growth in recession-hit Europe, saying Berlin should raise wages and organize a social welfare system "worthy of the name".

At a time when the euro zone's two leading economies are struggling to agree on a common strategy for reviving the debt-stricken currency bloc, French industry minister Arnaud Montebourg bluntly said Berlin should try to boost consumer demand.

"Germany has a duty. It has a (trade) surplus. It must raise wages, improve social welfare and pick up the baton on European growth," Montebourg said.

The G20 economic powers had agreed on the need for countries with large trade surpluses, chiefly Germany and China, to promote global growth by boosting domestic demand for other countries' goods, Montebourg told radio channel Europe 1.

"The problem is France needs growth because it has a bigger young population than Germany's and Germany needs to protect its financial surpluses because it has more pensioners - this is a problem that's going to have to be overcome," he said.

"We have things to ask of Germany above all: that it raises wages and that organizes a social protection system worthy of the name in a number of domains."

The euro zone, plagued by a debt market crisis for the best part of the past three years, slid into recession in the third quarter of this year despite modest growth in both Germany and France.

(Reporting By Brian Love; Editing by John Stonestreet)

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