IG Metall, ally unlikely the ECB

Chronic. It is a strange coupling but it doesn’t matter : the european central Bank (ECB) can say thank you to IG Metall, the powerful union of the metallurgy German. After months of tense negotiations, the juggernaut comes to get an increase in salary of 4.3 % for employees in the sector. An increasing value of the “benchmark” for millions of employees in the first economic power in europe. In turn, the service unions and government officials put themselves in order of battle, calling for between 6 % and 11 % increase…

There was a time when the ECB was following a suspicious trade union demands on salaries. Too many, too high, these could trigger an inflationary spiral, and by pushing companies to raise their prices to compensate for higher wage costs. A red line for the institution of Frankfurt, the guardian’s uncompromising price stability, with an inflation target of just below 2 %.

By that standard, the result obtained by the IG Metall could seem excessive. Etalée on twenty-seven months, the increase is expected to reach 3.7% in 2018 and 4 % in 2019, according to calculations by the firm’s analytics Oxford Economics. But the time is not the same any more : that which is bothering now the ECB is no longer a too-full inflation… but its disappearance.

Summarize. The euro area growth is robust. It is even at its highest level in a decade. The factories run at full speed. The unemployment rate, it continues to ebb. Seven million new “jobs” have been created since 2013. Some countries, such as Germany and the netherlands, close to full employment.

Here and there, in Europe, underpinned by a shortage of labour. However, and this is the great mystery of the recovery, wages shudder at barely. Beyond the Rhine, in 2017, they have risen only 0.8% in real terms. In the euro area,…

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