Fair Wages and Economic Recovery
There’s an interesting nugget about German trade union strategy in today’s FT (‘German unions seek pay rises on back of recovery’). This notes that, in negotiations for 110,000 steelworkers, due to begin on August 27, IG Metall, Germany’s biggest union, will focus on pay rises and a reduction in contract labour, rather than job security. The union agreed a two-year pay deal for engineering workers in February, including a one-year pay freeze and a 2.7% rise in 2011, in exchange for guarantees of job security.
Confidence in the recovery of Europe’s biggest economy is such that the focus can now move from protecting workers’ jobs to ensuring they get a fair share from the future economic upturn. IG Metall boss Berthold Huber also rightly points out the role of faster wage rises in stimulating domestic demand.
However, I was particularly struck by the fact that Peter Bofinger, a member of the five man panel of economic advisers to the German Government, has also called for wage rises of at least three per cent, to sustain a broad based economic recovery.
I wonder if we will see something similar in the UK. British trade unions showed just as much pragmatism as their German counterparts, agreeing to pay freezes and all kinds of flexible arrangements to protect jobs. When the recovery takes off in the UK, will David Cameron’s advisers be arguing for fair pay for our workforce too? I hope so. It’s always difficult to have a sensible discussion about workers’ pay here without hysterical voices crying fear of wage inflation. But we’ve seen the return of bankers bonuses and the Prime Minister has tried to tell us we are all in this together. So what about it, Dave? We aren’t calling for telephone number bonuses. Simply fair pay.