Strike threat signals German crisis

GERMANY'S all-powerful IG Metall union is stepping up its strike action with a walkout of 100,000 members planned for next Monday. But industry remains implacable that it will not bow to demands for a 6.5% pay increase in a recession with more than four million people on the dole.

The first large-scale 'warning strike' will affect 100 plants in a wide range of engineering and electrical companies, said union official Claus Eilrich. Some 10,000 workers laid down their tools on Wednesday in Bavaria and the Rhineland. If an accord is not struck by the end of next week a quarter of a million union members will be pulled out on 15 April.

The bosses are adamant that the offer of between 2% and 2.5% is fair 'and all that can be expected in these tough economic timesî, according to the president of the German Employers' Federation Dieter Hundt.

The struggle between labour and management is being seen increasingly as less of a simple wage battle and more of a titanic struggle to reform Germany - a struggle for its future as the economic powerhouse of Europe.

The Frankfurter Allgemeine Zeitung, Germany's most influential newspaper, said on Wedneday: 'To date no politician has been foolish enough to back the course of IG Metall: to do so would be political suicide in an election year. But simple head shaking at the union's misguided path is not enough. There is more at stake than this year's economy. If Europe wants to catch up with the United States as a vital force in the world economy politicians have to win this power struggle with the union.'

It is now being increasingly seen as a fight to the finish with the continent's most powerful union. The prospect of a spring and summer of industrial discontent could spell the end to any realistic hopes Chancellor Gerhard Schröder has for re-election in September.

The clash between IG Metall, government and industry has been a long time coming. Observers say it shows the gradual disintegration of the tripartite social pact which made Germany the world's third-largest economy and its workers among the best paid. 'It is grotesque that, in the worst economic situation in years, IG Metall is making the highest wage claim in years,' said Ottmar Zwiebelhofer of the German Employers Federation. Some 17% of the industries in which the union is represented are already making losses, according to the Gesamtmetall industry employers group.

The showdown is the strongest test yet of the old collective-bargaining mindset versus new euro-driven wage competition with management, perhaps finally, being able to break the enormous power of IG Metall whose lack of flexibility is blamed by many for hobbling the economy.

Lockouts, solidarity between managements and the use of non-unionised labour are issues currently being debated in boardrooms across Germany.