German builders reach pay deal

Strikers are bitter about job losses in the sector

A strike by German builders has ended with a pay deal that will increase wages by 3.2%.

Agreement was reached after night-long negotiations between the construction union IG Bau and employers.

The union had been seeking an annual rise of 4.5%, but eventually agreed to the lower rate.

The pay deal brings to an end the first national strike in Germany's construction sector since World War II.

Strike damage

In recent months, Germany has been hit by several damaging strikes, which have threatened the country's tentative recovery from a six-month recession.

Klaus Wiesehuegel (right) agreed a pay deal on behalf of the industry

A 10-day strike in the engineering sector was resolved with an agreement to increase wages by 4%.

The strikes could adversely affect Chancellor Gerhard Schroeder's election campaign, three months ahead of a general election.

Mr Schroeder's Social Democrats are already faring worse than the opposition conservatives in opinion polls.

Builders' pay dispute

Klaus Wiesehuegel, president of the IG Bau union, said it would ballot members on the pay deal by mid-July.

The union represents 340,000 of Germany's 950,000 construction workers.

Under the deal, a 3.2% pay rise would kick in from September.

In addition, employers said they would make a one-off payment of 100 euros (£65; $97) in August, amounting to a 1.7% rise.

IG Bau managed to call out 32,000 of the country's construction workers at about 2,800 sites.

Workers have become disgruntled, while many building firms are facing bankruptcy, following one of the deepest recessions in the German construction industry.

More unrest

Earlier this year, Philipp Holzmann filed for insolvency in one of Germany's largest corporate failures.

About 500,000 construction industry jobs have been lost since 1995.

Although a pay deal has been agreed with IG Bau, other strikes are continuing in Germany.

Verdi, the German services union, said that 2,000 Deutsche Telekom workers took part in stoppages on Monday.

The services union wants a 6.5% pay rise and has warned of further strikes.