More than half a million employees in the German chemical industry will get 4.1% more pay over a 15-month period in a collective wage bargaining deal that will add to inflationary pressures in Europe's largest economy.

With inflation currently running at an annual harmonized rate of 2.2% in Germany, the deal translates to a real increase in wages that could stimulate greater consumption, but at the likely cost of tighter monetary policy for the more feeble euro zone as a whole.

"We are proud that we could agree on this number," chief negotiator Peter Hausmann from the trade union IG BCE said.

The union had originally demanded 7% more for a period of 12 months for 550,000 workers after Germany's fourth biggest industry increased chemicals production at a double-digit rate last year - its fastest growth since 1976.

Of all euro zone members, Germany has recovered the fastest from the Lehman crisis, prompting some economists worried about weak internal demand to call for a greater share of corporate profits being allocated to wages rather than returned to shareholders in the form of dividends.

Any significant wage hikes would prove problematic to the European Central Bank, which all but announced a rate hike at its next meeting to pre-emptively head off any potential wage-price inflationary spirals.

Flexibility
IG BCE, known to be far more pragmatic than its engineering sector counterpart IG Metall, struck a deal with the employers' association that permits companies to introduce the wage increase flexibly depending on their financial situation.

According to the deal, those companies well off should hike pay immediately, while the average chemical industry firm is allowed to postpone the increase by a month before increasing wages by 4.1% over the remaining 14 months.

For those employers still battling with the after effects of the financial crisis, an additional two month delay is possible pending agreement with their own works councils.

The wage bargain begins and expires differently from one geographical region to another, so the strongest chemical companies in the states of Hesse and Rheinland Palatinate start paying more as of Friday, while those in Saarland begin at the latest.