The largest industrial union in Germany, IG Metall, has negotiated a deal that will raise the wages for its members by 4.3 percent. This is the largest wage increase in the industrial arena since 1992. The wage increase comes to combat the imbalances in the euro zone that have lead to increased sovereign debt. Analysts hope that this wage increase will offset the rapidly falling wages in countries like Greece. By offsetting them it may allow Greece to remain a member of the euro zone because the euro will maintain its strength.
This is very important economically. Higher wages will mean larger consumption which will hep to increase the GDP of Germany. Also in class on Friday we talked about currencies and exchange rates and how it is beneficial to a country to have a currency with high value. Since the euro is shared by most of Europe, Germany balancing it against Greece will benefit all the countries that use the Euro.
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