Germany's biggest trade union, IG Metall, said Monday it would push for a seven-percent pay rise for millions of workers in the key electrical and metalworking sectors, despite falling inflation and a sluggish economy.

The recommendation by the union's leadership, which will now be discussed by regional branches, comes ahead of new wage talks starting in September.

"Employees need significantly higher wages to combat persistent price pressures," the union said in a statement.

Wage demands by IG Metall -- which negotiates for some 3.9 million workers in sectors ranging from auto to electrical and mechanical engineering -- are closely watched in Europe's top economy as they often set the tone for negotiations in other industries.

IG Metall's executive board said it was advising members to seek a seven-percent pay increase over a 12-month period, as well as higher compensation for apprenticeships.

IG Metall chairwoman Christiane Benner said the demands were "reasonable" in these "turbulent times".

But the head of the Gesamtmetall employers' federation, Stefan Wolf, urged the union to be "more realistic".

"The metal and electrical industry is still in recession. But these ideas sound as if we are in an economic boom," Wolf said in a statement, warning that the focus should be on strengthening Germany's competitiveness.

In the last wage rounds in 2022, IG Metall clinched an 8.5-percent pay hike over two years to help members cope with soaring inflation after Russia's war in Ukraine and pandemic-related supply chain issues pushed up consumer prices.

German inflation has eased significantly since then, but at 2.4 percent in May it remained above the European Central Bank's two-percent target.

The German economy meanwhile shrank slightly in 2023 and the government expects only modest growth of 0.3 percent this year.