German workers stage day-long strikes as wage talks hit snag

Workers at industrial giants from Siemens to Daimler escalated a labour dispute with a series of day-long strikes across Germany that employers said will severely disrupt production.

Wage negotiations with the IG Metall union, which represents about 3.9 million employees and has already rallied almost 1 million protesters since the start of the year, culminated in 16 hours of tense and ultimately inconclusive talks last weekend.

Workers from Germany's northern coastal regions to southern strongholds in Bavaria downed tools in a bid to raise the stakes.

Companies including Thyssenkrupp and Siemens were among those affected on Wednesday, while strikes beginning in Berlin on Friday will hit BMW and Daimler's Mercedes unit.

Across Europe's largest economy, stoppages are planned at more than 250 firms over three days.

IG Metall said the wave of strikes had already affected more than 80 companies with around 68,000 employees by late afternoon on Wednesday.

"It will cause huge damage because all companies in the long supply chains are affected," said Oliver Zander, director general of employers' group Gesamtmetall.

The latest round of talks marked the fifth without a deal and negotiations won’t resume until the walkouts are over.

Emboldened by the strong performance of the German economy, IG Metall has been pushing for 6% more pay over 12 months for workers in the metals and electrical engineering sectors, as well as subsidised wages for those who reduce their hours to care for kids or older family members.

Really angry

Employers said they would agree on a raise of 6.8% over 27 months but have insisted subsidised wages for workers on reduced hours would discriminate against those already on flexible contracts who receive no subsidies.

"The workers are really angry about the employers' negotiating tactics," Joerg Koehlinger, a regional IG Metall leader, told ZDF television on Wednesday.

"Everyone can see how good the economic situation is, so we need a significantly higher wage offer and working hours that fit with people's lives."

A Bavarian employers' group said on Wednesday it filed suit in a Munich court to halt the stoppages and seek damages.

"We still want a compromise," the group's managing director, Bertram Brossardt, said in an emailed statement.

"To cause companies and the economy severe harm with day-long strikes is counterproductive and irresponsible."

Policy makers from central bankers to government officials are watching the collective bargaining talks closely.

Apart from the disruption from potential factory shutdowns, economists are concerned about the longer-term impact of wage stagnation.

If the region's most prosperous country cannot significantly lift wages, other nations may face an even greater challenge.

That would complicate the European Central Bank's efforts to boost inflation and eventually unwind stimulus measures.

One hurdle facing German companies is that they are already grappling with a tight labor market, making it difficult to agree to workers' requests for more free time.

Jobless figures published Wednesday confirmed this picture.

The unemployment rate dropped to a record low of 5.4% on a seasonally adjusted basis.

Unadjusted numbers showed fewer people were out of work during the winter period than usual.

With manufacturing output near the highest level in two decades and orders flowing, any slowdown in production could have severe knock-on effects.