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 on Thursday.
IG Metall's chief negotiator in North Rhine-Westphalia, Detlef Wetzel, said comprehensive warning strikes would be staged from next week, with up to 100,000 likely to participate.
Analysts said the tough line taken by unions reinforced their view workers would secure sizeable pay rises this year. Wetzel said he expected the first work stoppages to occur early on Monday at automaker DaimlerChrysler. He was speaking after the failure of a fourth round of talks between employers and workers' representatives in NRW. He did not expect a deal to be reached in separate talks in the state of Baden-Wuerttemberg later on Thursday.
IG Metall, Germany's biggest union, has demanded a 6.5 percent raise for its 3.4 million workers in the engineering sector but employers have so far only offered a fixed pay increase of 2.5 percent, plus a one-off payment equivalent to a 0.5 percent rise.
The union has rejected this, saying that less successful industries like construction and the chemicals sector have already secured bigger wage increases this year. If no pay deal had been agreed between workers' representatives and employers by mid-May, the union would ballot its members for large-scale strike action, Wetzel said.
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.
J.P. 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 percent, 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 percent range) has increased." Last weekend, a German newspaper reported that employers and workers' representatives had agreed to wait until early May before seeking to finalise a new wage deal. The unions have an obligation to desist from industrial action until April 28.
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