* Workers get 3.7 pct, need to renegotiate after 14 mths
* Employers' association warns of financial burdens
* Deal comes amid sign of low inflation, strong job market
HANOVER, Germany, Feb 5 German chemical industry
workers have agreed a 3.7 percent pay rise for the next 14
months, a climb-down from an original demand for a 5.5 percent
Under the pact that affects 550,000 workers, loss making
companies can postpone the wage hike by two months, the
industry's employers association BAVC and the chemical workers
union IG BCG said in separate statements on Wednesday.
"It's important for companies to remain competitive,
especially now that businesses are facing more and more
financial burdens," said BAVC president Margret Suckale, who is
also head of personnel at BASF.
A proposed law that would force German industrial companies
to pay a surcharge on the power they produce for their own use
would limit its leeway for raising wages, BAVC has
The union described the result as an "appropriate
compromise" that still yielded a marked wage increase.
In May 2012, the union and employers had agreed on a 4.5
percent pay rise but that deal is expiring between Dec. 31 and
the end of this month, depending on regional variations.
Rising wages and stronger German domestic demand are widely
seen as remedy against euro zone imbalances. Recent signs of low
inflation and a resilient labour market have shown there may be
room for pay hikes without endangering price stability.
German inflation held steady at a 1.2 percent annual rate in
January, bucking expectations for it to accelerate, mainly due
to subdued energy prices.
Berlin is relying on German domestic demand to continue to
prop up economic growth this year as weakness in the global
economy weighs on exports. These hopes were borne out by strong
German labour market data released last month.
The wage pact is in line with an agreement struck in May
last year for 3.7 million engineering, metal and electrical
sector worker, who received a 3.4 percent rise from July
followed by a further 2.2 percent rise in May 2014.
The largest German chemical companies are BASF,
Evonik, Bayer and Lanxess. Major
foreign producers, such as Dow Chemical, DuPont
and LyondellBasell, also operate sites in Germany, which
is Europe's largest chemical producing nation.