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Strike Wave Avoided

German Metalworkers Negotiate 4.2 Percent Wage Increase

German metalworkers union IG Metall had threatened a crippling wave of strikes, but after marathon talks it accepted a pay deal. Employers agreed to give them around half of their wage hike demands.

After a 22-hour marathon session, negotiators from IG Metall, Germany's largest labor union, and Gesamtmetall, an employers' association representing over 23,000 enterprises, finally reached a deal on Wednesday in the southern German town of Sindlingen, just outside Stuttgart.

Germany's metalworkers will receive a pay raise of 4.2 percent, an increase that comes in two istallments, half in February 2009, and the other half two months later. In addition, workers will receive a one-time bonus of €510 ($650) per person for the months November 2008 until January 2009.

The deal saves Germany's metal working and electronics industry, which in 2007 employed some 3.6 million people and generated €947 billion ($1.21 trillion) in revenues, from open-ended and potentially disastrous strikes.

The compromise provides metalworkers with far less than they had originally demanded. IG Metall began the negotiations back in September seeking a pay hike of 8 percent for its members, the biggest request by the union in 16 years. But that was before the collapse of Lehman Brothers and the subsequent outbreak of what many consider to be worst financial crisis since the Great Depression. Still, the union managed to significantly bid up the other side. Employers had entered neogiations offering only a 2.1 percent wage hike.

Jan Stefan Roell, who served as chief negotiator for the employers' association, called it "a good day" for Germany's metalworking and electronics industry. He went on to describe the deal as "all in all fair and stabilizing, but, as always, at the limit of what is economically feasible."

Although the agreement signed on Wednesday technically only applies to workers in the German state of Baden-Württemberg, union branches in the rest of Germany are expected to quickly ratify the deal as well. The contracts run for 18 months, until April 2010.

cpg -- with wire reports