German real wages seen rising in '09 despite recession

BERLIN, Dec 2 (Reuters) - German real wages will rise next year thanks to an anticipated slowdown in inflation which will more than offset the effects of what is expected to be Germany's worst recession since World War Two, experts said on Tuesday.

Even agreements for modest pay rises in Europe's biggest economy are sufficient to put more money in workers' pockets, said economists.

"We expect wage settlements to be higher than inflation for the first time since 2004," said Reinhard Bispinck, head of the wage archives at the Hans Boeckler Foundation, which is close to unions.

Over the last few years, modest wage deals coupled with higher inflation rates have resulted in few workers feeling the effects of the economic upturn.

But economists expect inflation to come in at around 1 percent next year, its lowest level since 2003, as prices for oil and other fuels slide. That will boost the value of workers' wages.

"The real wage increase should be around 1.5 percent in 2009," Kai Carstensen, head of the Munich-based Ifo research institute's economics department told Bild newspaper.

Last month, employees and workers in the engineering sector agreed a wage rise of 4.2 percent for 2009 and other industries have also agreed deals that are higher than the expected rate of inflation.

(Reporting by Rene Wagner; Writing by Madeline Chambers) Keywords: GERMANY WAGES/

([email protected]; +49 30 2888 5230; Reuters Messaging: [email protected])

COPYRIGHT

Copyright Thomson Reuters 2008. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.

RELATED TOPICS