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German workers begin daylong strikes as wage talks hit snag

German metalworkers hold banners, as they walk through the old Elbtunnel undercrossing the Elbe river, during a demonstration for higher pay on January 24, 2018 in Hamburg, northern Germany. (Bloomberg)

Workers at German industrial giants from Siemens AG to Daimler AG are escalating a labor dispute with daylong strikes beginning on Wednesday that threaten severe disruption to production lines.

Wage negotiations with the IG Metall union, which represents about 3.9 million employees and has already rallied almost a million protesters since the start of the year, culminated in 16 hours of tense and ultimately inconclusive talks last weekend.

Workers from Germany’s northern coastal regions to southern strongholds in Bavaria were set halt work starting on Wednesday in a bid to raise the stakes. Companies, including Thyssenkrupp AG and Siemens will be among those affected, while strikes beginning in Berlin on Friday will hit BMW AG and Daimler’s Mercedes unit. Across Europe’s largest economy, strikes are planned at more than 250 firms over three days.

“It will cause huge damage, because all companies in the long supply chains are affected,” said Oliver Zander, director general of employers’ group Gesamtmetall. “24-hour strikes are irresponsible and endanger jobs.”

The latest round of talks marked the fifth without a deal and negotiations won’t resume until the walkouts are over. IG Metall has been pushing for 6 percent more pay over 12 months for workers in the metals and electrical engineering sectors, as well as subsidized wages for those who reduce their hours to care for kids or older family members.

Deeply disappointed

Employers said they would agree on a raise of 6.8 percent over 27 months but have insisted that subsidized wages for workers on reduced hours would discriminate against those already on flexible contracts who receive no subsidies.

“I am deeply disappointed with the behavior of employers at the negotiating table,” IG Metall Chairman Joerg Hofmann said on Monday. “The other side has simply wiped our solution proposals off the table and burdened us with their lack of willingness to compromise.”

Policy-makers from central bankers to government officials are watching the collective bargaining talks closely. Apart from the disruption from potential factory shutdowns, economists are concerned about the longer-term impact of wage stagnation. If the region’s most prosperous country can’t significantly lift wages, other nations may face an even greater challenge. That would complicate the European Central Bank’s efforts to boost inflation and eventually unwind stimulus measures.

One hurdle facing German companies is that they are already grappling with a tight labor market, making it difficult to agree to workers’ requests for more free time. With manufacturing output near the highest level in two decades and orders flowing, a slowdown in production could have severe knock-on effects.

“I hugely regret that after all these long negotiations and intense efforts no result was reached,” Christoph Kuebel, personnel chief at Robert Bosch GmbH, told reporters on Monday. The 24-hour strikes will cause “significant economic damage,” he said.

 

 

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