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BUSINESS

French: Low German wages are unfair on us

A French economy minister has launched a scathing attack on Germany’s ‘unfair’ wage policy “which he claims is based on who can pay workers the least”. The attack was timed just days before the Germans goes to the polls.

French: Low German wages are unfair on us
Photo: DPA

France’s consumer affairs minister Benoît Hamon slammed Germany’s policy of keeping pay artificially low for being “unfair” on France.

Speaking to the BBC on a visit to an Optic 2000 factory, which creates eyewear in France, Hamon said “some countries in Europe are getting around employment directives and underpaying their workers.”

Hamon lamented Germany’s wage policy, which has helped keep the cost of German products down compared to “Made in France” goods.

“I want Germany to have a social policy where competitiveness doesn’t rely on jobs paying €400 a month,” he said.

“I want Germany not to base its agricultural economy on salaries of seven euros an hour. That’s what I want from the next German government.

“I want it to play fair with an economic model that isn’t based on a competition for who can pay workers the least.

“We are pitting workers at seven euros against those who earn 10, 11 or 14 an hour. That can’t work within the same territory. It’s not possible. It can’t work,” Hamon said.

France is struggling to kick-start its economy and the Socialist government has made a big push to promote the “Made in France” brand to try to boost its manufacturing industry.

But the high cost of wages compared to its neighbours on the other side of the Rhine river means France has lost its competitive edge to Germany in recent years.

Hamon does have a history of launching barbs at Germany. Earlier this year, he targeted Chancellor Angela Merkel, claiming her austerity policy had failed.

Should Germany introduce a national minimum wage? Take part in our debate here

Thomas Klau from the European Council on Foreign Relations in Paris told The Local that Hamon does have a fair point when it comes to wage policies.

“There are examples in certain industries where low wages have helped give German firms an advantage over French ones, such as abattoirs.

“They have paid mainly temporary migrants from Eastern Europe €5 an hour to work and live in conditions of extreme poverty. But under French law, abattoirs are not allowed to pay such miserly wages, which has helped the ones in Germany to flourish.

“In an area like the Eurozone the wage policies of each country can have a heavy impact in other countries.

“This means the agreement that member states are free to compete with each other is often a race to the bottom, where working conditions, for example, are not compatible with the kind of Europe we want,” Klau said.

With Germany facing elections on Sunday and current Chancellor Angela Merkel’s main opponent Peer Steinbrück vowing to introduce a statutory, national minimum wage, Hamon’s attack appears perfectly timed.

Ben McPartland

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ENVIRONMENT

Sweden’s SSAB to build €4.5bn green steel plant in Luleå 

The Swedish steel giant SSAB has announced plans to build a new steel plant in Luleå for 52 billion kronor (€4.5 billion), with the new plant expected to produce 2.5 million tons of steel a year from 2028.

Sweden's SSAB to build €4.5bn green steel plant in Luleå 

“The transformation of Luleå is a major step on our journey to fossil-free steel production,” the company’s chief executive, Martin Lindqvist, said in a press release. “We will remove seven percent of Sweden’s carbon dioxide emissions, strengthen our competitiveness and secure jobs with the most cost-effective and sustainable sheet metal production in Europe.”

The new mini-mill, which is expected to start production at the end of 2028 and to hit full capacity in 2029, will include two electric arc furnaces, advanced secondary metallurgy, a direct strip rolling mill to produce SSABs specialty products, and a cold rolling complex to develop premium products for the transport industry.

It will be fed partly from hydrogen reduced iron ore produced at the HYBRIT joint venture in Gälliväre and partly with scrap steel. The company hopes to receive its environemntal permits by the end of 2024.

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The announcement comes just one week after SSAB revealed that it was seeking $500m in funding from the US government to develop a second HYBRIT manufacturing facility, using green hydrogen instead of fossil fuels to produce direct reduced iron and steel.

The company said it also hoped to expand capacity at SSAB’s steel mill in Montpelier, Iowa. 

The two new investment announcements strengthen the company’s claim to be the global pioneer in fossil-free steel.

It produced the world’s first sponge iron made with hydrogen instead of coke at its Hybrit pilot plant in Luleå in 2021. Gälliväre was chosen that same year as the site for the world’s first industrial scale plant using the technology. 

In 2023, SSAB announced it would transform its steel mill in Oxelösund to fossil-free production.

The company’s Raahe mill in Finland, which currently has new most advanced equipment, will be the last of the company’s big plants to shift away from blast furnaces. 

The steel industry currently produces 7 percent of the world’s carbon dioxide emissions, and shifting to hydrogen reduced steel and closing blast furnaces will reduce Sweden’s carbon emissions by 10 per cent and Finland’s by 7 per cent.

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