Study: higher wages contribute to crisis management

Study: higher wages contribute to crisis management

Wage increases of 2.8 percent on average most recently had helped to alleviate the problems somewhat. The normalization process for wages in germany has so far been too weak to make a relevant contribution to countering the economic imbalances in the eu, said IMK head gustav adolf horn in berlin on monday.

According to the new IMK study, germany ranks eighth in the EU with wage costs of 31 euros per hour worked (2012) – and thus remains in the middle of the pack. Compared to 2011, the federal republic of germany slipped one place, swapping positions with finland.

Countries such as the netherlands, france, belgium and sweden have higher labor costs. Sweden had the highest labor costs in europe last year, at 42.20 euros per hour.

Labor costs are slightly lower than in germany, at 30.20 euros in austria. In the crisis countries of italy, ireland, spain, greece and portugal, wages range from 27.40 to 11.70 euros per hour. In addition to gross wages, labor costs include the employer’s share of social security contributions, expenses for education and training, and taxes considered to be labor costs.

According to horn, the current record german export surplus shows that the recent wage increases have not affected the competitiveness of local industry. "We criticize the surplus, not exports."It is in germany’s interest to take seriously the widespread international criticism of the high surpluses in the german current account balance.

According to the study, german industry benefits from the low wages paid in the german service sector. The difference to wages in industry is reported to be around 20 percent. The low-cost inputs of these service providers gave german industry a cost advantage of between 8 and 10 percent in european competition. This corresponds to around three euros per working hour.

Even after the introduction of a flat-rate statutory minimum wage of 8.50 euros, this cost advantage will not disappear, according to IMK researchers. It is shrinking somewhat, but still amounts to 6 to 7 percent compared to important competitors. In general, according to the IMK, higher wages with stable employment create the conditions for relatively strong private consumption. "This is trimming our economy."

In the private services sector, german labor costs in 2012 remained in ninth place after the benelux countries, the nordic EU countries, france and austria, at 28.40 euros. Here, too, the highest value was reported by sweden at 41.90 euros, while the average in the euro zone was 27.70 euros.

Labor costs in the german service sector rose by 3.1 percent in 2012. This was the first time since the beginning of the european union that growth exceeded the euro zone average (2.1 percent). In the first half of 2013, the increase in germany slowed to 2.6 percent.

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