Reuters reported that salary negotiations for 85,000 German steelworkers ended in stalemate on Monday, delaying for almost two weeks the next round of what is set to be a tough battle over pay.
The IG Metall trade union, which is demanding a hefty 6% wage increase after years of modesty at the negotiating table, said firms had not made an offer at the talks and were downplaying the strength of Germany's economic recovery.
Mr Oliver Burkhard leader of North Rhine Westphalia said that "Employers talked down the recovery today but our people know the extent of the use of overtime that order books are full and capacity utilization is high."
The steelworkers are demanding a hefty 6% raise in a 12 month deal that could set the tone for other industries in Europe's largest economy, as unions across sectors argue the time for wage restraint is over now the economy is picking up. The employers group has rejected the demand, which compares to a current annual inflation rate of 1%, saying production in 2010 had not once reached the average levels of previous years.
The main listed companies which will be affected by the wage agreement are ThyssenKrupp, Salzgitter and ArcelorMittal. Demand for steel plunged last year when the economy suffered its biggest post war recession, but Germany has bounced back. The German steel federation has said crude steel output rose by 59% on the year in the first 7 months of 2010.
However, the largest and best positioned sectors in German industry have largely concluded negotiations through next year, so sudden pay rises for most of Germany's workers are not immediately on the cards. But as the economic outlook brightens, unions from a variety of sectors have signaled a desire to return to the table or at least maximize the deals they have already negotiated.
IG Metall has already called for employers in the large engineering sector to bring forward an agreed pay rise by two months, a move allowed by a clause in the last wage deal signed for the sector's 3.5 million employees. And chemicals sector union IG BCE has said it would look at whether it could end a year long agreement it signed in April ahead of time in order to negotiate a wage rise.
Mr Michael Sommer chairman of the 6 million strong trade union umbrella group DGB, has said the upturn means workers should not settle for modest pay rises again after accepting moderate wage deals in recent years. The next round of talks, which cover steelworkers in western regions, is set for September 17th 2010 in the city of Gelsenkirchen.
