Germany reeling as strikes step up

GERMANY'S IG Metall union hit industries for the third day running today in its strike for higher pay that leaders and economic analysts say threatens the country's economic recovery.

Some 21 plants, including luxury carmakers Audi, Porsche and Mercedes, have already been victims of the escalating strikes, which will broaden if negotiations are not resumed.

Seventy-six thousand people walked out on Monday and Tuesday, hitting companies making fridges, medical equipment and batteries. Today some 13,000 workers are being called out in 33 vital Mittelstand, or small-to-medium-sized, companies that form the bedrock of the German economy.

Some 17% of these companies are already operating in the red but IG Metall's leadership is unrepentant. It warned today of strikes 'going on for weeks' unless its pay demand for a 6.5% rise across the board for its 2.8m members was agreed. It is understood it would probably settle for 4% but the highest industry offer is 3.3% spread over 15 months.

The stand-off is transforming into the biggest test of the old social contract between unions and bosses that built Germany's post-war economic miracle and made the country the powerhouse of Europe. Industry is in no mood to back down and many boardroom chiefs see this as an opportunity to strike a Thatcheresque blow to the union which they believe has been a long time coming. The one-size-fits all pay structure is seen as unworkable in a world of fluid money and an ever-changing industrial landscape.

The stoppages in the south western state of Baden-Wurttemberg are the biggest in seven years and throughout the week a further 50 companies, including the John Deere tractor plant, will be hit. Next week it is Berlin's turn.