UPDATE 1-German construction workers want 7 percent wage hike

Thu Feb 20, 2014 11:45am EST

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FRANKFURT Feb 20 (Reuters) - German labour union IG Bau wants a 7-percent wage increase for about 760,000 construction workers given expectations of an upturn in the sector this year, it said on Thursday, but employers said the demand was "unrealistic".

Rising wages would reduce the relative competitiveness of German industry, helping Europe's largest economy to show it is doing its part to reduce some of the economic imbalances in the euro zone that contributed to the region's troubles.

Wage hikes would also help boost private consumption in Germany, which is relying on domestic demand to prop up growth this year as foreign trade drags.

"Companies are in a situation that makes it easy for them to pay their employees more money," Dietmar Schaefers, vice president of IG Bau, said.

The union expects construction investment to rise by 4.2 percent this year, driven by an 8.7 percent increase in public-sector construction and a 4.3 percent rise in housebuilding.

Employers promptly rejected the demand that the union will put forward in negotiations on contracts for the next 12 months due to start on March 6 in Berlin.

"IG Bau seems to have been thinking of another sector when it came up with its wage demand and has misjudged companies' income situation," Frank Dupre, vice president of the ZDB construction association, told Reuters.

Last year IG Bau secured a wage hike of 3.2 percent.

Data released on Thursday showed real wages in Germany fell in 2013 for the first time in four years, due partly to a decline in bonuses and one-off payments.

Earlier this month employers and IG BCE trade union agreed a 3.7 percent pay rise for 550,000 chemical industry workers for the next 14 months, a climb-down from an original demand for a 5.5 percent increase. (Reporting by Frank Siebelt in Frankfurt and Klaus Lauer in Berlin; Writing by Michelle Martin in Berlin; Editing by Louise Ireland)

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