The End of Modesty

Employees have contributed significantly to the current boom in Germany: For several years, wage negotiations have done nothing more than keep up with inflation -- and even that didn't always happen. According to Germany's Federal Statistics Office, the buying power of employees has slightly dropped since 1990. That was a blessing for German companies, who do business on the international market. While their competitors had to raise prices because of rising wages, Germany's production costs fell significantly. This made the prices of German products more competitive.

Together with global economic growth, this formed the basis for the current export boom. Many German companies have reached their production capacities, which serves as an incentive for investments. Private consumption, however, is still lagging behind. The latter is especially important as it contributes more than half of the gross domestic product. Declining unemployment rates are important for private consumption as it brings more many to the market and increases consumer confidence. But people also need more money in their pockets.

It's an undisputed fact from a macroeconomic viewpoint. But employers naturally remain uptight ahead of wage negotiations, lament about supposedly bad times and do not want to grant anything. But looking ahead to the 2007 negotiations, it's impossible to deny that the boom is filling company coffers. Export-oriented businesses and their suppliers benefit especially. While privately owned companies savor secretly, publicly-owned ones present record revenues and record profits. It's no wonder that employees want their share. Employers are preparing for that. It will not end with the charm offensive by the head of the metalworking industry's association, Martin Kannegiesser. Whenever there's much to distribute, there's lots of fighting about percentage and tenth of a percentage points.

During the first few months of the coming year, wage negotiations will take place not only for the metalworking sector's more than 3 million employees, but also those working in the chemical and building sectors. Smaller ones are bound to follow. A profit-sharing concept for employees as called for by Germany's ruling coalition of Christian and Social Democrats won't play a role here. But it would make sense to organize profit-sharing for employees while increasing wages in a moderate way. That way, employees would share the success during good times while allowing companies to cut back on labor costs during downtimes.

One thing's for certain: The times of modesty are over. It's been like that for companies and employers for quite a while. It will be like that for employees starting next year.

Karl Zawadsky is a business editor for DW-RADIO (win).