German workers get 4.3% pay boost: biggest salary hike in 20 years puts billions into EU's economy

Around 3.6 million workers in Germany's automotive and engineering industries will get their biggest pay rise in 20 years, following a deal between the country's largest trade union IG Metall and employers. The agreement came early on Saturday morning ( May 18 ) after all night talks and the 4.3 percent increase, effective from May this year, has been widely welcomed, both in Germany and beyond.

Commentators believe the pay rise will help boost demand and so potentially benefit countries exporting to Germany. It will also make the manufacturing sectors of other countries more competitive, as labor costs in Germany rise, while the extra money in the pockets of millions of German workers should have a salutary effect on the local economy as consumption rises. Germany's government has also been pushing for the pay rise to be agreed, increasing the pressure on employers further, after earlier strike action by IG Metall workers. The pay rise is expected to cost employers around EUR 7 billion. Liam Lever, liam@romania-insider.com (photo source: Sxc.hu)