Rising wage rate may erode German's international price competitiveness

The statutory minimum wage, tighter labour market regulation and the new wage agreements will cause labour costs to rise further for German businesses. But thses may not affect immediately. The rising labour costs of German businesses will erode their international price competitiveness.

According tyo Commerzbank, "In the run-up to these legal changes and the wage bargaining round of 2015, we had expected a notable upsurge in labour costs. First experiences with the new labour market provisions and this year's collective wage agreements in several important sectors (e.g., metal and electrical industries; chemical industry; public service of the federal states) have prompted us to review our assessment.  Paid wages or salaries in German is expected to be around 3% in 2015 and 2¾% in 2016."