http://www.nytimes.com/2002/05/16/business/worldbusiness/16META.html
German Metalworkers' Union Wins Higher Wages By EDMUND L. ANDREWS
FRANKFURT, May 15 — After nearly two weeks of one-day strikes at scores of companies, Germany's giant metalworkers' union reached a deal with industry that will increase wages by 4 percent this year.
The raises are significantly more than employers had been offering, but the settlement is not a huge, resounding demonstration of the union's power. Wages will rise in the second year of the agreement by only 3.1 percent, much less than union leaders had been demanding.
The deal, announced this evening, ends the first major strike campaign that Germany has experienced since 1995. The strikes demonstrated a renewed militancy by IG Metall, the metalworkers' union, which has in recent years generally accepted modest wage increases to preserve jobs.
Union leaders had originally demanded annual raises of 6.5 percent, far higher than they had been able to extract in the past and greatly exceeding the rate of productivity growth in German industry. After it failed to come even close to an agreement at the bargaining table last month, the union began an unusual experiment, staging one-day strikes at individual factories. The strikes were meant to rattle companies without provoking lockouts or plant closings.
Today's result will almost certainly raise the minimum demands put forward by other big unions, and it could have ripple effects in neighboring countries that often take their cues from Germany. Just last month, the chemical workers settled for raises of only 3.3 percent — an example few unions will want to follow now.
The European Central Bank has warned for months that big raises could accelerate inflation, and it recently served notice that it already sees hints of price trouble. Germany's leading economic institutes have warned that any wage increases of more than about 3 percent could slow the country's fragile economic recovery.
The settlement with the metalworkers does not break that threshold by much. Averaged over two years, it raises pay by about 3.5 percent.
The agreement is good news for Germany's chancellor, Gerhard Schröder, who had pleaded without success for the two sides to reach agreement without a strike. Though strikes did take place, they did not paralyze the entire industry, and an agreement was reached fairly swiftly after the strikes began.
"Reasonable people on both sides succeeded in carrying it off," Mr. Schröder said.
Today's deal applies only to workers in the industrial state of Baden-Württemberg, and it still faces ratification by workers. But it is expected to be the model for very similar pacts in other states.
The bigger question is how it will sit with other manufacturers. Executives say that carmakers like Porsche and DaimlerChrysler's Mercedes, which are running nearly flat out, were more willing than other companies to accept higher wages. But the legions of small German parts suppliers feel squeezed by slumping prices, and many quietly threatened to abandon the industrywide wage deals if they became too expensive.
In a statement tonight, DaimlerChrysler expressed relief that the strikes were over and that "there will now be no additional impact on the delivery of vehicles," preserving its positive outlook for 2002. [end]