Monday

21st Jan 2019

EU commissioner asks Germany to raise wages

EU social commissioner Laszlo Andor has asked Germany to raise its wages in order to boost consumption and help other countries in the eurozone to export more.

A shift from budget cuts and austerity towards economic stimulus is needed to help the southern euro-countries overcome the crisis, Andor told Sueddeutsche Zeitung in an interview published on Monday (29 April).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • German shopper at discount supermarket Aldi - Andor says higher wages will increase consumption of EU-made products (Photo: regioblogview)

"Saving alone does not create growth. That requires additional investment and demand," he said.

Andor, a left-wing economist from Hungary, also pleaded for countries like Spain, Italy and France to be given more time to bring their deficit in line with EU rules. If not, he warned, all these countries will just pile on more debt.

He advocated a minimum wage in Germany - a demand also being made by the Socialist-Green opposition - explaining that it would help raise overall wages and boost consumption in the EU's largest economy.

"Belgium and France have been complaining about German wage dumping," Andor added.

If Germany continues to keep the wages low and have high export surpluses, the commissioner warned, "the currency union will drift apart. Cohesion is already half lost."

His remarks come after similar calls from the US government and the International Monetary Fund for Germany to do more boost internal consumption and help other eurozone countries with their exports.

EU commission chief Jose Manuel Barroso last week also warned about the "limits of austerity."

But he later emphasised the need for budget consolidation to continue.

For its part, the German government is claiming that it is already boosting internal consumption and that wages are increasing.

It says minimum wages have been introduced in a series of vulnerable sectors, such as construction and services.

Germany's central bank, the Bundesbank, warned in February against raising wages too quickly, as companies would fire people and invest less.

Dramatically increasing wages would only temporarily boost consumer demand, it argued, and in the long run, real incomes and consumer spending would actually decrease.

IMF tells Germany to do more for eurozone

Germany's economy is doing well in its recovery, but the country should be more "active" in helping the rest of the eurozone cope with the crisis, the International Monetary Fund has said.

News in Brief

  1. May U-turn on fee for EU nationals in UK
  2. French data watchdog gives Google €50m fine
  3. EU hits Russians with sanctions over Salisbury attack
  4. 'Don't look for answers to Brussels', EU tells UK
  5. Germany warns UK not to 'misuse' EU patience on Brexit
  6. Germany sent 8,658 asylum-seekers to other EU states
  7. Poll: Macron popularity up four percent
  8. 'Economy is broken' says Oxfam in global inequality report

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Join EUobserver

Support quality EU news

Join us