Friday's jobs and wage deal between General Motors and its German employees is a good example of what is happening in the German economy right now. The management of Opel, GM's European subsidiary, and worker representatives reached a deal to secure more than 30,000 jobs in the company's German car plants. In return, employees agreed to nominal wage cuts and more working time flexibility. They will also forego pay increases until 2010 in some cases.

The deal will have two primary effects: it will make Opel more competitive and it will reduce the income of the company's workers. If you look at the German economy, you will find the same going on: a slowdown in domestic consumption and an increase in exports. Last year, Germany was the world's largest exporter in absolute terms, yet consumption growth stagnated. Falling consumption and rising exports both have the same immediate cause: wage moderation. Companies are improving their competitiveness at the expense of their employees.