Germany faces public sector strikes as wage talks sputter

Public sector workers seeking 5.5 per cent pay hike
By Erik Kirschbaum
||Last Updated: 03/02/2015

BERLIN (Reuters) — German schools, hospitals and courts could be hit by token strikes lasting several hours in the next two weeks after a second round of talks on Friday between trade unions and state officials ended without agreement, union leaders said.

The trade unions are demanding a 5.5 per cent pay rise for some three million civil servants. Frank Bsirske, the head of the powerful services trade union Verdi, said employers had made no counter offer and were seeking cuts in retirement benefits.

"We'll now ask our workers to take part in token strikes to send a clear signal backing our justified demands," Bsirske said after the second round of negotiations in Potsdam, just south of Berlin, ended. The next round is set for March 16 and 17.

German unions have been emboldened this week by news that IG Metall, Germany's biggest trade union, won a thumping 3.4 per cent pay increase plus a one-off payment of 150 euros for the 3.7 million engineering workers it represents.

Unions argue that the public sector has failed to keep pace with private sector wage rises. Employers have rejected their demand as lacking "any sense of reality".

In general, German unions have been winning above-average pay hikes in the last few years after a decade of wage restraint and deals that failed even to keep pace with inflation — a trend that helped to improve Germany's competitiveness and to curb unemployment.

Political support

But the smaller pay rises also exacerbated strains in the euro zone and raised pressure on Germany to back higher deals to boost consumption in Europe's largest economy. Boosting wages and domestic demand in Germany are seen as ways to help tackle current account imbalances in the euro zone.

With political support, unions have been pushing for — and winning — pay increases that are well above the inflation rate. The IG Metall wage increase is more than three times above the inflation rate, which was 0.9 per cent in 2014.

The higher pay raises have boosted consumption and gross domestic product in Germany. Private consumption was the main engine of Germany's strong growth at the end of 2014.

The DBB civil servants' union, the GEW teachers' union and the GdP police union said they would also stage token strikes in coming weeks to back their demands.

The TdL association of states representing the employers have rejected the pay rise demands, saying they would cost some 6.5 billion euros.

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