Pay raise poker

The head of Germany's employers' federation for the metalworking industry on Sunday rejected calls by the country's top union for a 6 percent pay hike for 85,000 workers in the sector, saying the country's economic recovery was still shaky.

"After the deepest and most brutal slump in recent economic history, the recovery is still on wobbly legs," Martin Kannegiesser wrote in the Bild am Sonntag newspaper.

Firing the opening salvo in what is expected to be long and drawn-out pay negotiations in Europe's biggest economy, the IG Metall union, Germany's largest, called on Friday for an inflation-busting 6 percent rise following years of wage restraint.

"Employees must gain something from the recovery," the head of IG Metall union, Berthold Huber, told the Bild am Sonntag. "Higher wages are justified and sensible. They are good for people and good for the economy."

German economy on the road to recovery

Germany, Europe's economic powerhouse, has enjoyed a stellar bounce after a hefty recession during the global slump.

Output in the second quarter of this year was 2.2 percent higher than in the same period a year ago and the central bank has predicted annual growth of three percent.

However, economists have said they believe the economy is set to lose some steam in the second half of the year, which will likely complicate the pay talks.

In addition, inflation in Germany remains tame, with recent figures showing that prices in August rose only a very moderate 1.0 percent from the same month a year ago, well below the European Central Bank ceiling of 2 percent.

Author: Gregg Benzow (dpa/AFP/Reuters)

Editor: Sean Sinico