Monday, January 25, 2016

Why wages in Germany to rise rapidly – THE WORLD

Despite Euro debacle and emerging market crises: the labor market in this country has brilliantly developed in recent years: In Germany are so many people no longer employed in decades, unemployment has declined rapidly and the good business of the company and the high demand for labor have allowed wages to rise sharply.

The higher wages are happy employees, but for the company they are no reason to be happy: Not only that, the higher wages reduce the profits – if the labor costs are too high, which also ensures that the company produce more expensive than the international competition. Now proposes, financed by companies and employers’ associations Institut der deutschen Wirtschaft Köln (IW) alarm and warns that the competitiveness of the industry decline in this country.

The researchers have calculated that unit labor costs in 1991 rose to 2014 an annual average of 0.5 percent, stronger than the foreign competition. Within the euro area, the increase is, according to the data but on average. Unit labor costs are the most common measure of competitiveness; for labor costs are taken into consideration for productivity.

According to the calculations of the IW Cologne, unit labor costs of industrial companies from other economies were last year by eleven percent below the level of German industry. “Although productivity in Germany is higher than average,” says Christoph Schröder, Senior Economist at the IW Köln. “That, however, is not enough to compensate for the disadvantage of high labor costs.

To compare Schröder, unit labor costs in Germany compared with the unit labor costs in 25 other industrialized countries . In addition to the US, Canada and Japan are only taken into account other European economies to the analysis. The unit labor costs in Japan are therefore 13 percent lower than in this country and even lower by 25 per cent in the US.

Photo: AP A steel worker at the blast furnace

The European comparison falls for Germany effective from: Italy, Norway, United Kingdom, France and Belgium produce thus more expensive than Germany but. “On average, unit labor costs are not in the euro countries than those in Germany, but even three percent lower,” said Michael Huether, director of IW Köln.

“Germany has no price advantage; price competitiveness has been eroded in recent years,” warns IW-Huether boss. “The parties should therefore not to cover the distribution margin, which are severely limited by the low rates of inflation and the weak productivity dynamics.”

After calculating the European statistics agency Eurostat, the unit labor costs in Germany rose in 2014 by 1.9 percent and in the past year by a further 1.8 percent. While unit labor costs according to calculations by the IW Köln have risen since 1991 by an average of half a percent per year, the economic performance 1991-2015 is almost grown three times as fast – for the bill the Federal Statistical Office namely by an average of 1.3 percent per year.

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