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Germany: Country Locked In Struggle Over Wage Increases

Munich, 2 February 1999 (RFE/RL) -- Germany's new left-leaning government is facing its first confrontation with the labor unions that helped bring it to power last year. The unions are threatening major work stoppages unless they are given a big increase in wages.

Since last Friday, thousands of workers in Germany's automotive and other industries have staged warning strikes. They are demanding a 6.5 per cent increase in wages, while employers are offering two percent. Labor leaders have warned that if no progress is made by February 11, they will organize a strike vote.

So far there has been no sign of progress. Talks in Bremen yesterday (Monday) were adjourned without agreement. More talks in other parts of the country are scheduled for today and tomorrow. The talks are accompanied by new warning strikes. Yesterday, about 30,000 workers stopped work for the day and took to the streets to demonstrate. Union leaders said last night about 250,000 more will hold warning strikes in the next few days.

Industrial experts have warned a major strike could have serious consequences for the German economy, which is still trying to recover from recent stagnation.

Some economists are warning a strike in Germany could also have a knock-on effect in other countries, particularly France and Italy. They say this might damage the stability of the new European currency, the euro.

A labor attorney, Karl Beckman, said workers in several European countries have accepted low wage increases for a number of years. He said a major strike in Germany for a big increase might encourage unions in other countries to do the same. This could damage expectations for an economically stronger Europe and, in the process, hurt the euro.

The dispute is presently focused on the German metalworkers union, known as I.G. Metall. With around 3.5 million members, it is the biggest in Germany. It covers most industrial workers, including those in the important automobile industry. Traditionally, Germany's 14 smaller labor unions follow the lead set by I.G. Metall in their wage demands.

Already the second-biggest labor group, the public service and transportation union, with around 3.2 million workers, has joined the demand for higher wages. It is calling for a 5.5 per cent increase.

Some analysts believe that after 16 years of a conservative government, the unions want to flex their muscles under the left-leaning coalition led by Gerhard Schroeder.

Some see an irony in the fact that the labor minister in the new government, Walter Riester, was previously one of I.G. Metall's chief wage negotiators. Riester, who was deputy president of the union, had a reputation as a moderate in dealing with industry.

His successor, Juergen Peters, is known as a combative hardliner who believes German industry is now making solid profits and can well afford to meet I.G. Metall's demands. Peters says his personal motto in the present negotiations is 'No More Modesty'. He says I.G. Metall will not accept another year of low wage increases.

The employers' associations argue that union demands could lead to more unemployment. Germany now has four million unemployed workers - around 10 percent of the workforce.

Employers also argue that a hardline approach by unions could undermine plans by the government to convene a roundtable meeting to fight unemployment. Their argument is that industry is unlikely to offer concessions if unions are unwilling to compromise on wages.