Dismay over German pay

FRANKFURT - Trade union demands for high wage increases to reflect the much improved German economy have set alarm bells ringing among industry leaders, worried that the dash for improved competitiveness could grind to a halt, writes John Eisenhammer.

'We are going to demand our share of the good economic performance,' Klaus Zwickel, head of IG Metall, the biggest union, said.

His remarks caused dismay in management circles, keen to sustain the cost-cutting progress of the past 18 months.

Klaus Murmann, head of the German employer's association, said: 'One good wage round in 1994 has not solved our cost problems. Many firms still have to overcome structural deficiencies, and that requires another year of reason in 1995.'