German chancellor Merkel says economic upswing should benefit workers hurt by crisis

Merkel: economic upswing should benefit workers

BERLIN — German chancellor Angela Merkel said Thursday the current economic upswing should benefit workers who were hit by the economic and financial crisis.

Employees who made sacrifices during the crisis, such as accepting reduced work hours, should not be disappointed as the economy recovers, she told journalists in Berlin.

“We share the opinion that there is a certain economic recovery, but this upswing is still very fragile and that everything has to be done to secure jobs and create new ones,” Merkel said, while speaking alongside the head of Germany’s labor union federation, Michael Sommer.

The chancellor said that workers and employers stuck together to weather the crisis, and now both sides should reap the fruits of the recovery and avoid a situation “where many workers are disappointed.”

Her meeting with Sommer comes ahead of a series of wage negotiations this fall.

IG Metall, Germany’s biggest industrial union representing workers in the metal and electronic industries, has hinted it will ask for pay increases of six to eight percent this year.

The union this week already asked for a six percent pay increase during the negotiations it held in the German states of North Rhine-Westfalia, Lower Saxony and Bremen.

Strong exports helped push the German economy — Europe’s biggest — to growth of 2.2 percent in the second quarter and the country’s central bank, the Bundesbank, recently forecast that it will grow by about 3 percent in 2010.

Recent surveys have shown German business and consumer confidence continuing to rise. The unemployment was down to 7.6 percent in August, leaving some 3.2 million people registered as jobless, as the improving economy bolstered the labor market.

Even though the economy is picking up speed, inflation remains moderate.

Official data show that Germany’s annual inflation rate dipped to 1 percent in August despite a strong year-on-year rise in oil prices.

The rate was down from 1.2 percent in July, the Federal Statistical Office said. Consumer prices were unchanged in monthly terms.

Annual inflation was powered in particular by higher prices for oil products — up 7.3 percent on the year. Energy prices were up 2.5 percent and food prices rose 2.8 percent, it said.

Inflation in Germany has hovered around 1 percent for months and shows little sign of breaking out of that range. Data from the Europe’s biggest economy are important to interest rate decisions by the European Central Bank.