German industrial workers fire warning shot with strikes over pay

Thousands of German industrial workers walked out for several hours over the weekend in an escalating pay dispute as leaders of Germany’s powerful IG Metall union warned of more strikes to come if employers failed to improve their offer.

Europe’s largest industrial union is demanding an 8 per cent wage increase for 3.9mn employees in Germany’s automotive, metal and electrical industries to compensate for surging inflation. The pay demand is the highest since 2008.

The sector is the backbone of Germany’s wider economy and a bellwether for wage agreements in other sectors.

Employer representatives have offered a one-off payment of €3,000 spread over 30 months, arguing that companies themselves were being squeezed by surging energy costs and a potential recession.

On Saturday night, employees of more than a dozen companies across Germany, including steelmaker ThyssenKrupp and automotive suppliers Bosch and ZF, began a rolling programme of what the union called temporary warning strikes. The stoppages each lasted for several hours and are set to continue into early November at different companies across Germany.

The impact on production was limited, but the stoppages were an important symbol of workers’ determination, a union official said.

“The employers’ refusal to enter proper wage negotiations triggered this escalation,” the union said in a statement over the weekend, adding that it would step up its walkouts over the coming days.

IG Metall leader Jörg Hofmann has previously warned the union would escalate strikes if employers failed to table a better offer by November 9, when talks are set to resume.

Wages in the eurozone have this year lagged well behind inflation, which is expected to have risen above 10 per cent for the first time in the history of the region when October price data is announced on Monday. This has left many workers considerably worse-off in real terms.

Peer-Michael Dick, chief executive of Baden-Württemberg’s metal employers’ association, described the strikes as “completely unnecessary” and warned they created an additional burden for companies that were already stretched.

Economists say persistent high inflation could increase the likelihood of a 1970s-style wage-price spiral and prompt the European Central Bank to raise interest rates.

“Against the backdrop of high inflation, which results in considerable losses in purchasing power, the trade unions are likely to push through higher wages,” said Marco Wagner, a senior economist at German lender Commerzbank.

Eurozone wages rose 4 per cent in the second quarter, slower than in the US or UK. But unemployment in the 19-country bloc has fallen to a low of 6.6 per cent and labour shortages are growing in some countries, such as Germany, the Netherlands and Poland, according to Eurostat data from August, the most recent figures available. This puts many workers in a stronger negotiating position.

Some employers have given workers lump sum payments rather than lifting annual pay. The German government has encouraged this by treating lump sum payments as tax free. Workers in the German chemicals industry were this month given annual lump sum payments of €1,500 each over the next two years on top of a 3.25 per cent pay rise.

The ECB is keeping a close eye on eurozone wage growth after forecasting last month that it would increase from 4 per cent this year to 4.8 per cent next year. ECB president Christine Lagarde told a press conference last week that this was likely to accelerate faster, saying: “Incoming wage data and recent wage agreements indicate that the growth of wages may be picking up.”