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Tuuli Koivu, an economist at Nordea, has drawn attention to the effects of continuing wage moderation in Germany on Finland and the rest of the euro area.
Tuuli Koivu, an economist at Nordea, has drawn attention to the effects of continuing wage moderation in Germany on Finland and the rest of the euro area.

 

Finland should pay close attention to the bargaining negotiations conducted by one of the most influential trade unions in Germany, IG Metall, says Tuuli Koivu, an economist at Nordea.

Koivu reminds in a blog post that the outcome of the negotiations is likely to have an effects also on Finland, as the apparent willingness to refrain from substantial wage increases will all but ensure competition in the euro area remains tough.

“Germany is keeping its costs in check despite its solid economic situation and giving other eurozone countries nothing for free. The competitiveness gap that widened between Finland and Germany in 2005–2012 is narrowing painfully slowly and provides no room for compromising on wage moderation in Finland,” she writes.

IG Metall is heading into the negotiations with relatively modest objectives in terms of wage hikes, according to Koivu. Its northern chapter, she tells, is believed to be willing to settle for a wage increase of roughly six per cent over the next two years in exchange for greater workplace flexibility. The objective is to enable employees to work 28 instead of 35 hours a week on a temporary basis if necessary due to their family situation, for example.

Koivu estimates that the relatively moderate demands also bode well to mortgage borrowers across the European Union.

“If other countries manage to follow suit with the wage moderation in Germany, it may take quite a while before inflation picks up. Our forecast that interest rates would be raised for the first time [in a while] in 2019 may have been too aggressive after all,” she says.

Aleksi Teivainen – HT
Photo: Vesa Moilanen – Lehtikuva
Source: Uusi Suomi

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