Germany’s finance minister has warned that rising wages could lead to further inflation, with wage agreements for 10 million German workers up for re-negotiation this year.
“The risk of a wage price spiral is real,” Christian Lindner told Reuters, imploring parties involved in collective bargaining to help prevent such a situation. Unions are expected to push for a sharp wage hike during negotiations in light of cost of living increases, IG Metall leading the way last month with a demand for an 8.2% increase for more than 70,000 steel workers.
German annual inflation hit 7.8% in April, the highest level in more than forty years.
Lindner, who is also leader of the liberal FDP party, said that the companies and unions involved in negotiations had a responsibility in preventing the wage price spiral, whilst acknowledging the squeeze on wages experienced by workers and saying that payments could be made to those struggling.
“There are already signs that one-time payments could play a role this year,” he said.
The German government has approved two relief packages in as many months to assist households hit by soaring prices for food, energy and other necessities.