Germany's Chancellor Mr Gerhard Schröder has warned that looming strikes and unrealistic wage deals could throw economic recovery off course.
A summer of discontent is signalled in Germany with national pay talks at a standstill and strikes threatening Mr Schröder's re-election chances in September.
Employers are offering a 2 per cent pay rise in national pay talks but unions, including the powerful IG Metall union, want 6.5 per cent. "The tender bud of economic growth could be trampled by such an agreement," said Mr Schröder in an interview with news magazine Der Spiegel. "My hope is that we get a deal without a strike," he said, and appealed to the unions for "reason" in their demands.
His remarks come after a week of warning strikes called by IG Metall, which represents over 2.7 million workers in the car, engineering and related industries. The union has vowed to step up its warning strikes this month at DaimlerChrysler and BMW factories, with more to come, culminating in all-out strike in May unless their demands are met.
Last week's warning strikes spread across the country, culminating in the city of Augsburg in Bavaria, where workers went on strike at the light bulb manufacturer Osram.
"Osram has made good profits in recent years, and now it's the turn of the workers who made it all happen," said a union spokesman in front of 400 striking workers.
This is the crux: previous modest wage agreements have been overtaken by the cost of living and unions argue that wage moderation has not, as employers promised, led to increased job creation. They justify their 6.5 per cent wage rise by saying that increased pay would increase consumer demand. But employers call the union's demands "irresponsible" while the country is in recession.
Deadlock in national pay talks is nothing new, but the government is alarmed at the strength of feeling and rhetoric coming from the unions this time around. Strikes could delay Germany's hoped-for economic upswing in the second quarter and keep unemployment over the four million mark.
An IG Metall spokesman said last week that the union would not move "so much as a millimetre" from its goal of 6.5 per cent and that it is ready for a fight. But with six months to election day, it's a fight Mr Schröder cannot afford.
