German businesses rail against central bank higher wage calls

Author: Ryan Littlestone | Category: Central Banks

A report from Germany newspaper Handelsblatt says that a Forsa survey of 502 business executives shows an overwhelming majority against higher wages.

62% of execs said that higher wage settlements in Germany are not appropriate and 54% say that higher wages would bring them greater difficulties. 83% also said that the Bundesbank and ECB shouldn’t comment of wage policies and collective bargaining agreements.

Germany has very low unemployment with some areas having a jobless rate as low as 2.3%. In contrast to other European countries people can afford to pick and choose jobs.

Recently the Bundesbank surprisingly said it would be happy if wage inflation was to grow with president Jens Weidmann saying;

“It is to be welcomed that wages and salaries are rising more strongly than in the days when the German economy was in much poorer shape. We have close to full employment in a number of sectors and regions. and are seeing more and more reports of labour shortages”

It’s one avenue the Bundesbank are looking at to give inflation a lift and they, and the ECB, would like to see it spread across the Eurozone in part to help tackle low inflation.

Inflation is a tricky beast to contain and with the rest of the Eurozone still in a jobs market slump the Germans could find themselves running into much higher inflation well ahead of the rest, which will bring them problems further down the line.

“Be careful what you wish for” might be the apt saying in this instance.

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