German economy and trade unions

German unions flex muscles as economy stutters

(AFP) – 19 hours ago

BERLIN — Germany's powerful trade unions are flexing their muscles, pressing for wage increases and job guarantees just as Europe's biggest economy struggles to emerge from its worst post-war recession.

Pilots at Lufthansa, Europe's biggest airline by sales, voted on Wednesday to stage next week what is being billed as one of the most severe strikes in Germany in recent years.

Meanwhile, about 300 easyJet airline cabin crew walked off the job on Thursday morning at Berlin's Schoenefeld airport, causing the cancellation of seven flights.

But it is in the public sector that Germany's unions are making themselves heard the most, with about 120,000 workers across the country stopping work in early February in what unions called "warning strikes."

The industrial action kept buses in their depots, flights grounded, kindergartens closed and rubbish uncollected across Germany, Europe's top economy.

"In the private sector, unions have seen that the crisis left deep wounds last year and have been more open to cooperation," said Gernot Nerb from the Ifo institute. "But in the public sector, the unions have more room to act."

Talks between unions representing 1.2 million public sector workers collapsed this week and negotiations were set to go into arbitration from Thursday.

The head of the Verdi union Frank Bsirske called the employers' offer of a 1.5-percent pay increase over two years "utterly insufficient." Verdi wants a rise of five percent.

But the demand comes at a tough time, with the recession leaving Germany's public finances in tatters and putting Berlin in breach of European Union deficit rules for years to come.

Chancellor Angela Merkel's federal government says it will have to borrow over 85 billion euros (115 billion dollars) this year. Finance Minister Wolfgang Schaeuble warns that spending cuts must be found somewhere.

Data showing zero growth in the fourth quarter suggested that Germany's recovery may be not as strong as hoped.

"In the current situation the unions have to be honest what their demands will mean: higher taxes, more debts, higher kindergarten fees and the closure of libraries, theatres and swimming pools," Interior Minister Thomas de Maiziere said this month.

With fears of unemployment rising as government measures including subsidised shorter working hours begin to run out, some unions are compromising on wages in return for job guarantees.

For example automaker Volkswagen this week guaranteed the jobs of 100,000 workers until the end of 2014, with Daimler doing the same for 37,000 at its main site.

And a pilot agreement announced on Thursday between employers and the IG Metall union representing 3.4 million workers in metalworking and engineering industries also saw wage demands take a back seat to job guarantees.

Unions are negotiating with chemicals giant BASF on a similar commitment.

"Since the crisis began, safeguarding jobs has been the unions' priority number one," said Reinhard Bispinck from the Hans-Boeckler Institute.

How much longer this can go on is uncertain, however, as Berlin seeks to balance its budget and as government stimulus programmes run out, and to prepare itself for the long term challenge of an ageing population.