European unions protest over pay

John Monks, head of the European Trade Union Confederation, said Saturday’s rally was a show of anger and determination on pay and also the injustice of top managers earning as much as 300 times the wage of their workers.

"We cannot accept the sermons and lectures of European central bankers and finance ministers," Monks said. "Europe’s workers want their fair share."

MINISTERS SOUND INFLATION ALARM

Finance ministers and central bank chiefs of the 27 European Union countries discussed the deteriorating economic outlook at what were once luxurious bear-hunting quarters of late communist dictator Josip Broz Tito, in Brdo, 25 km outside Ljubljana.

They sounded the alarm over inflation which hit a record annual rate of 3.4 percent in the European Union in March, due mostly to the surging price of oil and food.

Ministers and central bankers concluded that rising prices were the biggest danger to the European economy and cautioned against excessive pay demands, wary that big settlements would trigger a wage-inflation spiral.

Prices have been partly contained by the strength of the euro currency -- it hit a record of $1.5904 to the U.S. dollar last month -- but ministers and central bankers are unhappy about excessive swings in currency markets and pledged to say so at a G7 meeting on Friday of next week.

Unions believe higher wages provide better protection against rising prices for workers and would also give slowing economic growth by boosting consumer spending power.

But European Central Bank President Jean-Claude Trichet said keeping a lid on labour costs would be "absolutely decisive" in fighting inflation and that a five percent pay rise for German public sector employees in 2008 should not be copied elsewhere.

"It would be an enormous mistake to imitate Germany," said Trichet, stressing that German public sector workers had lived with wage freezes for two years.

More unusually, the euro zone’s chief inflation-fighter got hearty support from politicians who also stressed that the fight against inflation was the best way to defend spending power.

Jean-Claude Juncker, who chaired some of the talks, told a Friday news conference inflation was at an "incredible level".

Even if he and Trichet could afford to pay more for tomatoes many could not and inflation had to stifled, he said.

"Those living on 300, 400, 500, 600, 700 euros can’t live with runaway inflation," Juncker said.

Spanish central bank chief Miguel Angel Fernandez Ordonez said slowing economic growth would ease the rate of inflation but any moves that could make things worse should be avoided.

The advice of ministers and central bankers went down poorly with protestors, whose peaceful march in a sunny Ljubljana may have mustered a figure closer to police estimates than those of unions, according to a Reuters journalist at the scene.

"We condemn the threats of the politicians, ministers and employers that the wage rise would cause further inflation, while they keep the real reasons to themselves," said Dusan Semolic, head of the Slovenian Trade Union Confederation.

(Writing by Brian Love; additional reporting by Krista Hughes and Maria Novak, Editing by Nick Edwards)