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Wednesday, 15 May, 2002, 19:58 GMT 20:58 UK
Pay deal ends German strikes
IG Metall worker on strike
IG Metall worker on strike
Engineering union and industry leaders have reached a pay agreement set to end Germany's most damaging strikes since 1995.

The IG Metall union said that a deal had been reached which would see workers in the state of Baden-Wuerttemberg, where industrial action has been focused, receive a pay rise of 4% from June.

That rise would drop to 3.1% from 1 June next year.

The compromise followed day-long talks between IG Metall and engineering employers, and 10 weeks of unrest which has affected some of Germany's best known firms, including DaimlerChrysler and Porsche.

More than 100,000 workers from 85 firms had joined one-day strikes called in support of pay rises of at least 4%.

Employers had offered 3.3%.

Klaus Mehrens, a negotiator with the IG Metall trade union, described the deal as "an acceptable compromise" speaking on the BBC's World Business Report.

"I wouldn't talk about a victory but it is a good compromise," he said.

Pay squabble

Wednesday's deal covers only 800,000 factory employees Baden-Wuerttemberg, and still requires agreement by union members.

A separate deal needs to be struck for the Berlin region, where the strikes spread to over the last week.

But, with the accord needing the support of only 25% of state IG Metall members to pass, ratification in Baden-Wuerttemberg is thought certain.

"We are sure that the large majority of our members and other workers will approve of it too," IG Metall boss Klaus Zwickel said.

And Berlin workers are deemed likely to use Wednesday's agreement as a template for their own deal.

Long-term threat

The long-running strike had proved embarrassing to German Chancellor Gerhard Schroeder in election year.

Mr Schroeder on Wednesday welcomed the agreement, saying it displayed "common sense for the economy as a whole".

The dispute also threatened to further damage an economy which has proved one of the worst hit in Europe by the global economic downturn.

Analysts had been surprised that union chiefs managed to gain an offer as high as 3.3% from German manufacturers attempting to recover from last year's recession.

The risk of Wednesday's deal was that, while it came close to meeting union demands, it could see investment shifted abroad, analysts said.

"Even the mid-sized employers already have subsidiaries in Eastern Europe. For these guys, it won't take long," said Deutsche Bank Economist Stefan Schneider.

For unions, "victory is the wrong expression", he added.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Dharshini David
"Some analysts argue it will just make the German economy even more uncompetitive"
Klaus Mehrens, IG Metall
"I wouldn't talk about a victory but it is a good compromise"
See also:

13 May 02 | Business
German strikes spread to Berlin
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