German labour leaders urged May Day demonstrators yesterday (1 May) to fight for big pay rises after a decade of restraint that had seen wages in crisis-hit southern eurozone nations soar.
The head of the powerful IG-Metall union, demanding a 6.5% rise, described an offer of 3% over 14 months as a farce. From Hamburg in the north to Stuttgart in the south, the mood of members rallying in sunny weather under red union flags, banging drums and blowing whistles, was combative.
"If we don't have a result [from talks] by Pentecost, then there will be a strike ballot and strike," said Berthold Huber, referring to the May 27-28 holiday.
In Berlin, thousands marched through the government quarter to hear speeches at the central Brandenburg gate near the Reichstag parliament building. One brightly coloured truck carried a banner reading: "It's time to cough up the money."
IG Metall, with a membership of 3.6 million, held warning strikes at the weekend and is planning more for Wednesday in Germany's industrial heartland of North Rhine-Westphalia.
If the major unions achieved pay rises anything near their demands, pressure for a policy response would grow.
There are signs German policymakers are already starting to worry about inflation, although it continues anchored around 2%. Last week, Economy Minister Philipp Rösler said the European Central Bank should refocus on price stability.
German trade unions, however, see their demands backed by strong corporate performance and record low post-unification unemployment of 6.7%, contrasting starkly with other eurozone countries such as Spain where unemployment has reached 24% after years of high wage rises and fiscal laxness.
"After years of pay cuts in real terms, after years of efforts to help the country through the crisis and helping save many companies and jobs, it's our turn now," said Michael Sommer, head of the DGB federation of German unions.
Sommer said in a speech in Stuttgart that public sector union Verdi had paved the way for wage hikes this year by securing a 6.3% pay rise over two years for its two million workers. The union leader said other unions would be fighting hard for similar deals in the weeks ahead.
"We need good pay increases this year and we're going to fight for them," he added. "We're all aware of IG Metall's fighting abilities and we're all proud of that. But we can't expect it to happen on its own. We're going to have to fight."
Huber, the leader of IG Metall, told a rally in the northern port city of Hamburg that the offer from employers was a farce. He said Germany's thriving engineering sector, which includes carmakers and many top exporters, can afford far more.
Last week Volkswagen reported a 10% increase if first quarter operating profit to €3.2 billion. Last year Europe's largest carmaker had a record operating profit of €11.3 billion.
"The offer they made is a provocation," Huber said and warned the union was ready to raise the number and scope of its industrial actions ahead of the next round of talks in mid-May.
Armin Schild, a regional IG Metall leader, also called the employers offer "a provocation" on Sunday.
Unions want their share
The same message was heard at a rally in Chemnitz, where the Saxony leader of IG Metall Olivier Hoebel told a rally: "We want our share now." Several hundred thousand people took part in 420 rallies around the country, according to union officials.
Some marchers carried signs with slogans such as "Austerity in Europe means unemployed youth in Europe" or "it's time for a minimum wage in Germany.
The modest wage increases in the last decade have boosted Germany's competitiveness but they are also sometimes blamed by economists for contributing to imbalances in Europe that have exacerbated the eurozone crisis.
Between 2000 and 2007, nominal compensation in Germany grew by a mere 1% per year on average compared with 2.7% in the eurozone. German wages rose more strongly in 2011 but by a still modest 1.5% average.
That was also below Germany's 2% inflation rate.
Pay increases in this year's wage rounds have been higher than in many years. Deutsche Telekom agreed to a 6.5% pay rise over the next two years for the 17,000 staff at its Bonn headquarters but the company and unions are still in talks over pay at its larger units with some 79,000 workers.
Chancellor Angela Merkel, with an eye on next year's election, also signalled her support for a labour union demand calling for minimum wages for sectors in Germany that don't already have one.
Sommer said in his speech in Stuttgart that a quarter of the German population is being forced to get by on "starvation-level wages" because there is no general minimum wage. Unions are demanding a minimum wage of €8.50.
The minimum wage reversal is the latest example of Merkel co-opting the policies of the centre-left Social Democrats and Greens to bolster her party's popularity with centrist voters.
Merkel told the Hamburger Abendblatt daily that she wanted to "put an end to the practice where some workers have to accept lowest possible wages."
Union demands for stronger wage increases after a decade of restraint have also been backed by Merkel's Labour Minister Ursula von der Leyen. In February she violated an informal ban on government intervention in wage talks by calling for pay raises of more than 2%.
"Now that … German corporate profits are strong, it's time for workers to get a share of that," von der Leyen said.
Labour cost differences across Europe can be huge, according to recent figures by the European statistical office Eurostat.
Hourly labour costs for 2011 range from €3.5 in Bulgaria to €39.3 in Belgium, the highest in the European Union, and just ahead of Sweden (€39.1), the Eurostat figures show.
The average hourly labour cost for the eurozone is of €27.6, higher than the EU-27 average (€23.1).
Other EU countries with cheaper labour costs include Romania (€4.2), Lithuania (€5.5), Latvia (€5.9), Poland (€7.1), Hungary (€7.6), Estonia (€8.1), Slovakia (€8.4), and the Czech Republic (€10.5).
In Germany, the hourly labour cost is €30.1 compared to France's €34.2.