German labor union IG Metal agrees 4.3 percent pay deal: sources

Reuters News
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Posted: May 19, 2012 6:21 AM
German labor union IG Metal agrees 4.3 percent pay deal: sources

By Hendrik Sackmann

SINDLEFINGEN, Germany (Reuters) - A key regional branch of Germany's IG Metal union clinched a deal for a 4.3 percent wage increase over a 13-month period early on Saturday, sources told Reuters, an agreement that will likely set the benchmark for 3.6 million engineering workers nationwide.

The deal in the southwestern town of Sindlefingen after all-night talks takes effect retroactively from April 1, according to sources involved in the negotiations.

It ends weeks of partial walk-outs and warning strikes to press home the union's demands for a 6.5 percent pay rise. Employers had previously offered a pay rise of just under 2.6 percent.

There was no immediate confirmation of the breakthrough by officials from the local chapter of IG Metal or the employers. But officials from both sides said there would be a news conference set for 4:30 a.m. local time (0230 GMT), without elaborating.

Baden-Wuerttemberg is home to German manufacturers including Daimler and Heidelberger Druck, and engineering wage deals there traditionally set the tone for agreements across the rest of the country.

While wages in the crisis-hit euro zone periphery are falling, German workers are enjoying the benefits of a robust economy and a healthy labor market after a decade of wage restraint, in turn fuelling the economic divergence that has underpinned the currency area's debt crisis.

For a graphic, showing German wage restraint, click on: http://link.reuters.com/nyw36s

In March, the 2 million workers in Germany's public sector won a 6.3 percent pay rise over a 24-month period and Finance Minister Wolfgang Schaeuble has said wages in Germany can afford to grow faster than in other parts of the European Union.

(Reporting By Henkrik Sackmann; Writing by Erik Kirschbaum; Editing by Peter Cooney)