Germany: Challenging 2008 pay round ahead

Germany’s 2008 pay bargaining round promises to be a challenging one for negotiators as higher employee expectations, fuelled by rising company profits and a declining share of wages in national income, collide with a forecast slowdown in economic growth.

Growth slowed from 2.9% in 2006 to 2.5% in 2007, and most forecasters expect it to drop back to around, or even below, 2% for 2008 and 2009.