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Germany

German Union Threatens Strikes in Troubled Car Industry

Germany's largest industrial trade union IG Metall said it would launch strikes this weekend set to affect the country's struggling automobile sector after rejecting an offer of a 2.9-percent wage hike.

Sparks fly as a metall worker is cutting into a piece of metal

Sparks are bound to fly in the coming months

The trade union on Friday rejected the 2.9 percent wage increase over the next 12 months. German employers had argued that the credit crunch and

financial meltdown is making bigger offers unrealistic.

Late Thursday, employers tabled an offer of 2.9 percent wage hikes for the next 14 months in south-western state of Baden-Wuerttemberg, home to

automakers Daimler AG and Porsche SE.

IG Metall's regional branch immediately rejected the offer.

"What employers have offered today ... is not an offer, but an invitation to a labor dispute," Werner Neugebauer, who heads IG Metall's Bavarian branch, said.

Union wants eight-percent hike

IG Metall is seeking an 8 percent salary increase over the next 12 months, arguing it is justified on the basis of a 220 percent increase in companies' profits between 2004-2007 -- a time when wages effectively increased by only 8.7 percent.

Metal workers carry banners with the slogan 'We are worth much more!' during a demonstration of the German metal workers' union IG Metall in Fellbach near Stuttgart in 2007

The IG Metall trade union asked for an 8 percent wage increase weeks ago

Berthold Huber, head of the IG Metall union, told Friday's Bild newspaper that if no pay deal is reached, "the real wave of strikes" would start Monday.

"This offer by the employers is indecent because it would mean real wage losses for staff" due to inflation, he said. "It is irresponsible because it would choke off economic growth. The conflict cannot be resolved this way -- I see no solution without work stoppages."

IG Metall in the south-west is Germany's trend-setter in wage-fixing, striking deals that are usually copied by manufacturing industry elsewhere in the country and emulated in other business sectors where unions are less militant.

Nationwide, IG Metall represents 3.6 million workers, not all of them card-carrying union members.

The negotiations are likely to set a benchmark for subsequent pay talks in other sectors, and are sure to affect the powerhouses of German industry such as Siemens, BMW, Daimler and Volkswagen.

German carmakers have seen sales slump as the financial crisis begins to bite. Concerns are mounting that Germany's all-important exports of cars, trucks and industrial plants may soon plummet as global demand falls.

The conflict comes amid recession fears after the government in mid-October slashed its growth forecast for next year to 0.2 percent from 1.2 percent previously.

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