Modest wage increases

Wage increases remained low in 2006 - to the chagrin of workers, but to the relief of experts

Employees surprised by modest pay raises last year can join the crowd. Economists are also surprised that average wages increased by an unexpectedly low 3.2 percent in 2006, according to the Confederation of Danish Employers.

The strongest gains were seen in the metal industry, the hotel and restaurant industry and the construction industry.

Unemployment is at a 30-year-low, and experts had expressed concern that the shrinking pool of workers would force wages up, as demand for their services increased. The higher cost of doing business, they warned, would derail the current economic expansion. Last year's increase, however, was only slightly higher than 2005's 2.8 percent.

Jes Asmussen, senior economist for Handelsbanken told financial daily Børsen: 'The signs indicate that the boom is not causing wage increases that erode our competitiveness.'

Labour organisations and employers are currently engaged in collective bargaining for the coming three years. Asmussen said the results of those negotiations would serve as a thermostat for the economy in the near future.

Despite the lower-than-expected increase, other economists pointed out that Danish wages had grown significantly faster than in neighbouring countries.

Germany, Denmark's largest trading partner, saw workers take home only 1.25 percent more than last year on average, according to Steen Boccian, Danske Bank.

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