Germany's engineering sector has ended a 10-day pay dispute in a settlement that is widely seen as a victory for the unions, although employers welcomed the longer-than-usual 22-month period over which it will be valid.
Striking metalworkers returned to their workplaces on Thursday
Engineering union IG Metall and employers federation Gesamtmetall on Wednesday agreed on a deal that amounts to a 4% pay rise for the 12 months to June 1, 2003, followed by a 3.1% rise for the six months to end-2003. It also includes a one-off payment of 120 euro for May 2002, but no increases for March and April this year.
The two sides of industry also agreed an opt-out clause for companies that are in financial difficulties, in particular among Germany's small and mid-sized business sector.
Furthermore, the deal includes a clause ensuring identical pay for white-collar workers and blue-collar workers, IG Metall said.
The agreement was reached for the southwestern state of Baden-Württemberg but it is expected to be adopted nationwide for the 3.6 million workers in the sector.
IG Metall chief Klaus Zwickel expressed satisfaction with the settlement, saying it will finally mean more money for workers.
Otmar Zwiebelhofer, chief negotiator for the Gesamtmetall employers' federation in Baden-Württemberg, said that the deal was too high to protect employment in the sector. "Companies will have to rationalize more strongly," he warned. Even the expected recovery in the economy in the second half of this year would not limit looming job cuts in the metals industry, he added.
Zwiebelhofer conceded that IG Metall had succeeded in obtaining "the magical 4%" increase. But the settlement had been acceptable to employers because it would run for a longer-than-usual 22 months, he said.
The union initially demanded a wage increase of 6.5%, but lowered the claim to around 4% during the failed wage talks last month. Employers at the time offered 3.3% and a one-off payment of 190 euro.
Wednesday evening's agreement ends the first strike in seven years in Germany's metals and engineering industry, which had threatened the tentative recovery of Europe's largest economy and had affected major corporations such as DaimlerChrysler AG.
Chancellor Gerhard Schröder welcomed the deal, saying it should support the upswing under way in the economy.