February 2, 2016 / 11:22 AM / 4 years ago

UPDATE 2-German union IG Metall to seek wage increases of up to 5 pct

(Adds employers’ reaction, details)

FRANKFURT, Feb 2 (Reuters) - Germany’s biggest union IG Metall said on Tuesday it would seek wage increases of between 4.5 percent and 5 percent for the 3.8 million metals and electrics sector workers after the German economy grew at its fastest rate for four years in 2015.

After growth of 1.7 percent last year, the government trimmed its forecast for 2016 last month, saying the growth rate would remain flat this year amid emerging market risks that are dampening export demand.

IG Metall chief Joerg Hofmann said in a statement that a wage increase would help bolster domestic spending, thereby supporting the economy, Europe’s largest.

“That is a demand that companies are able to finance and that secures a fair and deserved share of the economic success for workers,” he said, adding that the sector achieved an above-average net margin of 3.6 percent last year.

But Rainer Dulger, president of Gesamtmetall, the umbrella association of German metal and electrical industry employers, criticised the union’s demand as an unreasonable “flight of fancy”.

He accused IG Metall of not recognising the seriousness of the situation, saying: “Our business location is falling to pieces”, adding that the sector’s competitiveness should be the main consideration.

A final decision on the union’s demands is due on Feb. 29, with negotiations kicking off in mid-March. The negotiations will take place in a buoyant labour market.

German unemployment fell more sharply than expected in January and the jobless rate dropped to a record low, Federal Labour Office figures released on Tuesday showed, suggesting private consumption will keep growth in the economy steady.

Last year the union had demanded a 5.5 percent wage rise for workers and ended up getting a 3.4 percent pay hike after staging a series of warning strikes. (Reporting by Ilona Wissenbach; Writing by Maria Sheahan; Editing by Ralph Boulton)

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