[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 21 April 2006, 09:43 GMT 10:43 UK
German unions set strike deadline
Workers stage a warning strike at Boeblingen earlier this month
Workers have taken to the streets to support the pay demand
Germany's largest union has warned that a pay settlement must be reached with employers by Tuesday or else it will consider escalating strike action.

IG Metall wants a minimum 3% pay rise for its 3.4 million workers in the engineering and metalworking sectors.

But employers are reluctant to grant this, saying wage moderation in recent years has boosted competitiveness.

Last-ditch talks are being held in North-Rhine Westphalia to try and secure the basis for a national deal.

'Serious' situation

Unionised workers have already held a series of temporary "warning stoppages" at Daimler Chrysler, Porsche and Bosch factories in North-Rhine Westphalia, Germany's largest state.

Union leaders are threatening more widespread action unless what they regard as a satisfactory deal is hammered out in the next few days.

Real strikes would go against the trend of an improving outlook for the economy
Reinhard Kudiss, chief economist at the BDI employers' federation

"I am concerned that some employers underestimate the seriousness of the situation," Juergen Peters, IG Metall's chief executive, told Die Welt newspaper.

"They should know that a wage conflict also gathers its own momentum."

Under German law, unions can only call a ballot on strike action if negotiations with employers have broken down.

Mr Peters said IG Metall may be compelled to take this course of action on Tuesday, although he stressed that it would only consider strike action as a last resort.

IG Metall has hinted that it is willing to reconsider its initial demand for a 5% wage rise but would not accept an increase of less than 3%.

German newspaper Westdeutsche Allgemeine Zeitung said employers were considering a basic 2% offer with a further 1% rise linked to productivity gains.

Inflation concern

Employers are worried that their international competitiveness will be eroded by too generous a settlement.

Germany's recent economic upturn has been driven by a growth in exports, something which economists attribute in part to pay restraint at many of the country's leading employers in recent years.

Employers' organisations said strike action would be extremely damaging for Germany's economy.

"Real strikes would go against the trend of an improving outlook for the economy," said Reinhard Kudiss, chief economist at the BDI federation.

The European Central Bank is watching the pay negotiations closely, amid concerns that rising energy costs are stoking inflation in Europe's largest economy.




SEE ALSO:
German unions in warning strikes
01 Mar 06 |  Business
Germans split over Merkel plans
21 Nov 05 |  Europe
Reshaping Germany's companies
15 Sep 05 |  Business
Will Germans work longer?
22 Jul 04 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific