German employers threatened April 24 to cut jobs or shift them abroad in the wake of the weekend pay deal that gave 3.4 million workers in the key engineering and metalworking sectors wage increases of 3%.
"It's going to be very, very difficult for employment in Germany. Three percent is simply too much," the head of the BGA federation of exporters and wholesalers, Anton Boerner, wrote in the regional daily Tagesspiegel. On April 22, employers and unions in the key regional state of North Rhine-Westphalia struck an agreement to give workers in industries ranging from cars to semi-conductors three percent more pay from June 1, plus an average one-off bonus of 310 euros (US$384). The North Rhine-Westphalia pay deal was to act as a pilot agreement for the other regional wage talks. The compromise had been reached after 10 weeks of talks, with bitter recriminations of both sides, and only just avoided an all-out strike in the sector.
BGA chief Boerner said the deal could put the brakes on the tentative recovery of the German economy, since high labor costs would make the country's exports less competitive. The head of another employers' federation, the VDMA, Dieter Brucklacher, also described the deal as a "Pyrrhic" victory for the IG Metall labor union. Companies would have no choice but to cut jobs and move jobs abroad at a time when unemployment in Germany is close to five million, Brucklacher said.
The current wage deal runs only for 13 months.
Copyright Agence France-Presse, 2006
