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ECB chief Trichet sets an example, with sub-inflation 2pc pay increase


ECB president Jean-Claude Trichet

ECB president Jean-Claude Trichet

ECB president Jean-Claude Trichet

European Central Bank president Jean-Claude Trichet's salary rose 2pc last year, less than the rate of inflation and in line with his call for wage restraint in the 15-nation euro region.

Trichet's base salary rose to €345,252 from €338,472 in 2006, according to the Frankfurt-based bank's annual accounts published yesterday. By comparison, US Federal Reserve chairman Ben. Bernanke earned $191,300.

He has the risk of excessive pay increases as a threat to price stability at a time when inflation is already at 3.2pc, the fastest pace in 14 years.

The ECB, which aims to keep inflation just below 2pc, on Thursday left its benchmark rate at a six-year high of 4pc and dashed speculation that a rate cut was imminent.

"Trichet's setting an example,'' said Kenneth Broux, an economist at Lloyds TSB Group in London.

"You wouldn't expect him to get much more if he's serious about keeping inflation in check.''

European unions have stepped up demands for higher wages to compensate workers for surging food and energy prices.

IG Metall, Germany's largest labour union, last month won a 5.2pc rise for some 85,000 steelworkers at companies including ThyssenKrupp AG. That's the biggest wage gain for steelworkers in 15 years.

"The risks to inflation over the medium term are on the upside,'' Mr Trichet warned yesterday.reporters after yesterday's rate decision.

"They include the possibility that stronger than currently expected wage growth might emerge, taking into account tight labour-market conditions.''

German public-sector workers yesterday rejected an offer of 5pc more pay and an incentive bonus for working longer hours. The Ver.di union, negotiating on behalf of 1.3 million employees, is seeking 8pc more pay. The demand now goes to arbitration.

While Trichet's salary increase undershot last year's 2.1pc in was still larger than the average 1.4pc gain in German wages in 2007, which was the most in six years.

Salaries for some 35.3 million German employees rose to €27,083 on average, the Federal Statistics Office in Wiesbaden said March 5.

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