German negotiated wages increase by 3.2 pct in 2014

Negotiated wages in Germany increased by 3.2 percent in 2014, official data showed on Friday, exceeding the rise of consumer prices and laying a foundation for robust private consumption.

The agreed upon wages, including special payments such as annual bonuses, rose most in the environmental protection and innovation sectors, Germany's national statistical office Destatis said. The negotiated wages for employees in the recycling and remediation sector went up 4.2 percent last year, and those in the research and development sector were up by 3.6 percent.

Significantly lower wage increases were seen in sectors such as hospitality, extraction of oil and gas and aviation with annual rises of 1.7 percent, 1.6 percent and 0.6 percent respectively.

The average wage increase was the highest since 2010, according to Destatis. In 2014, the German inflation rate was 0.9 percent.

Higher wages, low inflation, and low interest rates encouraged German consumers to open their wallets. In 2014, private consumption was the main driver for the German economy, which expanded by 1.6 percent.

A survey by market research institute GfK showed that consumer confidence in Germany hit its highest level since October 2001 and Germans' willingness to purchase also reached an eight-year high.

The survey expected private consumption to increase by 1.5 percent in 2015 and continue to be a key pillar in the of support Europe's biggest economy. Endit