Some 800,000 metalworkers in the German state of Bade-Wurtemberg won a 4.3 percent pay rise in marathon negotiations, their union said on Saturday, raising hopes that years of wage restraint are ending.
The regional accord, the first to be signed in Germany this year, sets a benchmark for wage negotiations in other regions.
Trade union IG Metall had demanded a rise of 6.5 percent over 12 months, pressuring businesses in the sector with country-wide strikes since the end of April, notably by employees of Bosch, Siemens and Daimler.
Wages had stagnated despite an inflation rate that stood at 2.1 percent in April, and workers have been emboldened by Germany’s resistance to the eurozone crisis to demand a bigger piece of the pie.
The deal, which takes effect immediately and will run through April 2013, was reached after late-night negotiations Friday, the fifth round of bargaining.
It also limits the use of temporary workers in a sector that employs 3.6 million people and is the backbone of Germany’s export-driven industry.
Workers must now receive permanent contracts after two years at the same company, and firms are encouraged to hire trained apprentices.
Employers’ federation Gesamtmetall recommended applying the agreement nationwide.
The metalworkers have not done as well as Germany’s two million civil servants, who last month secured a 6.3 percent pay hike for two years.
German employers are facing increasing pressure from workers to raise wages after 15 years of pay restraint and tough labour-market reforms such as a steadily rising retirement age, increased from 65 to 67 in 2007.
The German government is also facing calls from its eurozone partners to let wages rise, putting upward pressure on inflation and benefitting weaker European economies.
Finance Minister Wolfgang Schaeuble acknowledged earlier this month that the time had come for faster pay rises in Germany.
“It’s normal that salaries rise more quickly here than in other EU countries,” he told the German weekly Focus. “We have years of reforms behind us.
“And by raising pay, Germany would help reduce economic imbalances in Europe.”
Germany’s unemployment rate in April was seven percent, the lowest in more than 20 years.
Even leading austerity advocate Chancellor Angela Merkel and her government awarded themselves their first pay rise in 12 years this week, an increase of 5.7 percent in three stages until August 2013.
Some 220,000 bank employees are currently fighting for a six percent pay rise.
“Employees’ power is on the rise” in many sectors of the economy thanks to a lack of qualified labour and an ageing population,” Guenter Warsewa, head of a labour research institute at the University of Bremen, said recently.
“The German negotiation system will allow us to arrive at an intelligent result” on pay rises, he added. “The unions will not put growth or productivity in danger.”