With a recession looming in Europe's biggest economy, the biggest German industrial trade union IG Metall on Friday threatened strikes from next week in the key metalworking and electronics sector. Union chief Berthold Huber slammed the employers' offer of a 2.9-percent wage hike and said warning strikes on behalf of the industry's 3.6 million workers would begin overnight.
IG Metall is seeking an eight-percent pay increase - the highest the union has sought in 16 years. If no pay deal is reached, "the real wave of strikes" would start Monday, Huber told Friday's Bild newspaper. "This offer by the employers is indecent because it would mean real wage losses for staff" due to inflation, he said.
"It is irresponsible because it would choke off economic growth. The conflict cannot be resolved this way - I see no solution without work stoppages." Late on Thursday, after a month of bitter negotiations, employers tabled a sweetened offer of 2.1-percent wage hike for 2009 and 0.8 percent more for the last two months of 2008 in the pilot region Baden-Wuerttemberg.
Pay negotiations begin simultaneously in several regions and the first to reach an accord generally serves as a guideline for the rest of the country. The head of the regional employers' group conducting the negotiations, Jan Stefan Roell, called the offer "a sign of fairness and responsibility in an extraordinary situation" for the economy.
Analysts say the union knows it is unlikely to reach its target of eight percent, particularly with the gloomy economic outlook, but that it is unlikely it will settle for less than five percent. The current wage agreement runs out at midnight Saturday, meaning warning strikes could begin immediately.
The negotiations are likely to set the tone for subsequent pay talks in other sectors, and will have an impact on the powerhouses of German industry such as Siemens, BMW, Daimler and Volkswagen. Daimler, heavy truck and diesel engine maker MAN and auto parts maker Continental have all lowered their profit outlook recently and warned they would scale back production as the global financial crisis begins to bite.
The conflict in the metalworking sector comes amid recession fears after the government in mid-October slashed its growth forecast for next year to 0.2 percent from 1.2 percent previously. Weaker global demand will depress activity in the export-oriented German economy, officials warn. Employers may also raise the spectre of job cuts and point to a dip in inflation, which fell to 2.4 percent this month from three percent in September due to the decline of oil prices, to take the wind out of IG Metall's sails.
However Finance Minister Peer Steinbrueck, a Social Democrat, said Thursday he backed calls for higher pay, noting that the development of workers' wages and corporate wealth had drifted far apart in recent years. "I consider wage increases in the current climate to be not only defensible but also justified," he said.
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