German IG Metall union heads for strike action

Gelsenkirchen (Germany), Apr 27: Workers in Germany's engineering and metal-working sector aim to begin work stoppages next week after unions failed to agree on a new pay deal with employers in a key state.

Detlef Wetzel, chief pay negotiator for industrial union IG Metall in the most populous state of North Rhine-Westphalia (NRW), said comprehensive warning strikes would be staged from next week, with up to 1,00,000 likely to participate.

Employers in another state, Baden-Wuerttemberg, later indicated they were ready to improve their current pay offer.

Analysts said the tough line taken by unions reinforced their view workers would secure sizeable pay rises this year.

Trouble was brewing for German labour relations in other sectors too as regional employers' groups threatened to derail a pay deal in the construction sector and a new round of wage talks at Deutsche Telekom broke down yesterday.

Wetzel said he expected the first work stoppages to occur early on Monday at carmaker DaimlerChrysler.

He was speaking after the failure of a fourth round of talks between employers and workers' representatives in NRW.

IG Metall, Germany's biggest union, has demanded a 6.5 per cent raise for the 3.4 million workers in the sector, but employers have so far only offered a 2.5 per cent fixed pay rise, plus a one-off payment equivalent to a 0.5 per cent increase.

The union has rejected this, saying that less successful industries like construction and the chemicals sector have already secured bigger wage increases this year.

At separate talks in Baden-Wuerttemberg, the Suedwestmetall employers' group said a better pay offer was possible.

''We'll improve our proposed solution as soon as the union shows it's ready to work towards a result,'' Suedwestmetall leader Jan Stefan Roell said as talks began later yesterday.

Restraint Urged

If no definitive pay deal was agreed between workers' representatives and employers by mid-May, IG Metall would ballot its members for large-scale strike action, Wetzel said in NRW.

The European Central Bank has urged unions to exercise restraint with their wage demands, warning them that big pay rises could push up inflation in the euro zone.

However, German unions say they have accepted modest pay rises in recent years and point to the fact the economy grew by 2.7 percent in 2006, the fastest rate in six years.

Analysts expect IG Metall to push for a rise of at least 4 percent, due to big productivity gains the industry has made in recent years. Employers are expected to resist such a rise unless the contract lasts significantly longer than 12 months.

JP Morgan economist Silvia Pepino said the latest developments had reinforced the bank's view workers in the industry would ultimately secure a substantial settlement.

''We have long been expecting a deal above 4 per cent, with the exact number depending also on the timeframe of the deal (one or two years) and the structure of one-off payments versus permanent increases,'' she said in a research note.

''The mentioned developments suggest that the risk of an even higher outcome (in the 4.5-5 per cent range) has increased.'' Tensions have bubbled to the surface in other sectors lately after initial wage talks this year proceeded smoothly.

Deutsche Telekom and union officials broke off a fresh round of talks yesterday as services union Verdi said it would decide next week whether employees will go on strike.

Meanwhile, doubts have risen about a pay deal struck for the construction industry on March 31 because employers' lobbies in two states have yet to give their approval of the accord.

Reuters>