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WAGE

Employers concerned by union pay raise demands

Sweden’s unions announced demands on Monday that workers in the manufacturing sector receive a 2.6 percent wage increase, much to the dismay of leading employers' groups.

In addition to the increase, which would put 620 kronor ($88) more a month in industrial workers’ pockets, unions are also demanding that workers across all sectors receive a raise of at least 430 kronor a month.

Sweden’s main trade union organization, the Swedish Federation of Trade Unions (LO) also threw its support behind the 2.6 percent wage hike, which it plans to include in its collective wage demands going into the 2010 negotiations with employers.

“The demands we’ve united around give our members real wage increases at the same time as giving us more responsibility for ensuring the economy continues to function. The crisis didn’t occur because wages in Sweden are too high, but because of a steep drop in demand. Wage increases which are too low lead to a reduction in consumption and a prolonged increase in unemployment,” said LO secretary Per Bardh in a statement.

LO also plans to stop employers from including clauses in the agreement that would allow for wages to be reduced.

“We’ve said that we’re going to stick together across the federation,” said Bardh.

But labour’s wishes have been greeted with scepticism from Swedish employers’ groups, who claim that the manufacturing unions’ demands “abandon the founding principle of manufacturing collective wage agreements”, according to a joint statement from manufacturing employers.

Business representatives claim the wage-hikes demanded by the unions would hurt competitiveness, concerns shared by the Swedish Agency for Government Employers (Arbetsgivarverket), which handles negotiations with unions on pay and employment conditions for employees in the government sector.

“If sectors struggling to remain competitive sign an agreement at the levels demanded by LO, there is a risk that unemployment will increase not only within manufacturing, but also within the state sector,” writes the agency’s director general Göran Ekström in a statement.

The Confederation of Swedish Enterprise (Svenskt Näringsliv) calls LO’s demands “deeply troubling”, saying they amount to a 4 percent raise for many low-wage trade unions.

“Manufacturing becomes a floor, where half of the labour market should have more,” said the confederation’s Christer Ågren at a press conference.

He added that the National Institute of Economic Research (Konjunkturinstitutet) has said previously that a 4 percent wage hike would be bad for employment and the economy.

“Is this a sign that we’ve lost our capacity to adjust wages to reality? This is like continuing as if nothing has happened,” said Ågren.

Instead, the Confederation of Swedish Enterprise wants to see a zero percent increase in central wages next year, while allowing for the possibility of increases in 2011 and 2012.

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WORKING IN GERMANY

German steelworkers agree 6.5 percent pay hike after strike

Tens of thousands of steel workers in western Germany will get a 6.5-percent pay hike this year - the biggest jump in three decades - in a settlement that could set the tone for industry as inflation soars.

German steelworkers agree 6.5 percent pay hike after strike

The agreed increase would come into effect “from August 1st”, the IG Metall union in the region of North Rhine-Westphalia said in a statement Wednesday.

The 68,000 steelworkers in the industrial region would also receive a one-off payment of 500 euros for the months of June and July, the union said.

The outcome of the negotiations was “the biggest increase in wages in the steel industry in percentage terms in 30 years,” said IG Metall boss, Joerg Hofmann.

Germany’s largest union, IG Metall launched a strike action at steelworks in the west in May after management failed to meet its demands for an 8.2 percent pay increase.

On Thursday at the peak of the movement, around 16,000 workers across 50 firms downed tools, the union said.

READ ALSO: Should foreign workers join a German union?

“Rising inflation” and the “good economic situation” of the steel industry were the basis for IG Metall’s demands.

Consumer prices rose at a 7.9-percent rate in Germany in May, a record for the country since reunification in 1990 driven by the outbreak of the war in Ukraine.

The smaller number of steelworkers in the east of Germany, who are also seeking an 8.2 percent pay boost, have yet to reach their own agreement.

Negotiations are currently taking place in a number of sectors. In the textile industry, 12,000 workers in the east of Germany sealed a 5.6 percent pay increase at the beginning of May.

Meanwhile, negotiations covering the auto industry, and mechanical and electrical engineering will begin in November.

Despite the agreed rise the onus was still on government to relieve the pressure on workers form rising prices “in the coming months”, IG Metall boss Hofmann said.

Significant wage demands have prompted concerns of a wage-price spiral, where rising pay sustains higher inflation.

The European Central Bank last week said it would raise its interest rates for the first time in over a decade this July as it seeks to stamp out price rises.

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