Money Matters - Simplified

Secret to success: Exports and low wages

Berlin -- Job openings are springing up at major industrial firms in Germany, where wages are stagnant and fear keeps wage demands low, market analysts said.

"Fear of unemployment made workers more willing to accept concessions," The New York Times quoted Commerzbank economist Ralph Solveen as saying.

"That will certainly change in the next few years," he said.

Investor George Soros wrote recently that "Germany is actually making it more difficult for the other countries to regain competitiveness."

In Germany, exports are up and the unemployment rate down, falling to 7.6 percent from 9.1 percent at the first of the year and from 13 percent five years ago.

Soros wrote Germany is making do "by cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro."

Other countries in Europe are counting on wages in Germany to purchase imports and to provide tourist dollars when German workers travel.

Meanwhile, automaker BMW is hiring and international engineering firm Siemens said 19,000 workers on reduced hours during the recession were all working full time again.

For BMW, sales in China doubled this year as the firm posted profits of $1.1 billion in the second quarter.

"Naturally, we are pleased about the additional tailwind the economic upswing in some countries is providing us," BMW Chief Executive Officer Norbert Reithofer said.

Copyright 2010 United Press International, Inc. (UPI).

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