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Economy

German wages outpace inflation

Last year, Germans enjoyed higher incomes as wages grew steeper than prices in Europe's biggest economy. Although the rise was less significant than in previous years, it was the third consecutive increase in real wages.

Nominally, wages in Germany rose by 2.6 percent on average in 2012, which was 0.6 percent above the national annual inflation rate of 2 percent, according to latest figures released by the German Federal Statistics Office (Destatis) Thursday.

This was the third annual rise in German real wages after they had grown 1.5 percent and 1 percent in 2010 and 2011 respectively, Destatis said.

The 2012 data showed that the wage hikes achieved by German workers accelerated by the quarter, from about 2 percent nominally in the first three months to 3.2 percent in the final quarter.

Surprisingly, the increase in real wages last year came about in spite of an economic downturn that saw the German economy shrink by 0.5 percent in the final quarter.

With meager annual growth of just 0.4 percent expected for Germany in 2013, economists have already warned against further rising wages. Wages must reflect productivity gains of about 0.6 percent on average, German central bank president Jens Weidmann urged in January, because otherwise companies would cut investments and lay off workers.

However, Peter Bofinger, one of the economic advisors to the government, recently suggested hiking wages by 5 percent this year. Some 3 percent would derive from the rate of inflation and productivity gains, while the other 2 percent would help Germany rebalance the eurozone through higher imports.

uhe/dr (dpa, Reuters)

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