In a significant development, Volkswagen has agreed to a wage deal with Germany’s most powerful union for 120,000 staff, representing 18% of its workforce.
The deal with IG Metall sees salaries rise by 2.3% from January 2022.
It also includes a one-off $1,190 (1,000 euro) “corona support payment” in June, said VW.
Here are initial analyst reactions:
THOMAS GITZEL, VP BANK:
“Order books have markedly filled up in past months and the negotiating power of the employee side was thus not as bad as had been commonly assumed. It’s worth noting that the duration of the wage deal at 23 months is substantially longer than the original employee demand. … As a result, employers must be satisfied with the outcome.”
CARSTEN BRZESKI, ING:
“This is indeed a deal based on moderation that will probably be reflected in other areas too. It shows that, despite rising inflation, the wage-price spiral feared by many will not rear its head in Germany. That said, no boost to purchasing power can be expected either. Preserving jobs is clearly the main priority.”
HOLGER SCHMIEDING, BERENBERG BANK:
“The long duration of the VW deal shows that wage pressures will only start to build up slowly again. For the ECB there are no grounds for concern over inflationary developments in this. After a temporary inflation hump this summer, eurozone inflation will fall well below 2% in 2022 again. Monetary policy should for the time being remain very expansive.”