BERLIN (MNI) – Germany’s economic upswing is still “very fragile,”
Chancellor Angel Merkel said Thursday at a joint press conference here
with the head of the German Federation of Trade Unions (DGB), Michael
Sommer.

“We are jointly of the opinion that there exists a certain economic
recovery but that this upswing is still very fragile, and everything has
to be done to secure jobs and, wherever possible, create new ones,”
Merkel explained.

A raft of economic data released this week came in weaker than
expected. Manufacturing orders, industrial production and export numbers
for the month of July all disappointed.

Finance Minister Wolfgang Schaeuble said last month that the
domestic economy would take time to return to pre-crisis levels and may
yet face fresh headwinds.

Despite the record 2.2% GDP growth in the second quarter, Schaeuble
warned that “there is no room for complacency.” Germany should prepare
for potential downward risks ahead that may stem from “developments in
raw material markets or weakening growth in the US,” he said.

Still, last week, DGB leader Sommer reaffirmed that the unions will
end their wage moderation in the upcoming pay rounds. “Where it is our
turn, we will proclaim the end of modesty,” he told German ARD public
television. “We want a fair share of the gains from the recovery,” he
stressed.

At his press conference with Merkel today, Sommer did not make any
comments on the upcoming pay rounds.

The powerful IG Metall trade union is currently seeking a 6% pay
rise in the wage talks for some 93,000 employees in the steel industry.

Moreover, IG Metall leader Berthold Huber has called on employers
to bring forward by two months to February 2011 the 2.7% pay hike agreed
earlier this year for some 3.4 million employees in the metalworking and
engineering industry.

Under the 23-month pay deal for the metalworking and engineering
industry, employees received a E320 one-off payment for the period from
May 2010 till March 2011. From April 1, 2011, they are to get a regular
2.7% pay rise. However, IG Metall and the employers agreed that the pay
rise could be moved forward or backward by as much as two months
depending on the economic situation at the individual company level.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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