Pay agreement averts steel strike in Germany

IG Metall, the German industrial union, has secured above-inflation pay increases plus substantial one-off payments for the 85,000 workers in west Germany's steel industry. The deal, signed on 11 May, came as the union was about to ballot its members on strike action.

Running for 17 months from 1 April 2005, the settlement provides for five one-off payments of €100 - one for each of the months April to August - followed by a 3.5% increase from 1 September. This is less than the 6.5% that IG Metall was claiming, but is well above the employers' earlier offer of 2.4% and Germany's current 1.6% inflation level (April).

The union argued that a substantial increase was justified in the light of the industry's profitability - but the employers responded that the cyclical nature of the industry meant that current profits would not last for long. The threat of a strike, at a time when blast furnaces are running at full capacity, seems to have won the argument.

Contrasting the settlement with earlier, more moderate increases, IG Metall president Jürgen Peters said that "the years of sacrifice" were finished. The country's major steel-maker, Thyssen-Krupp, described the increase as acceptable - but Dieter Hundt, president of the BDA employers' association, said that "under no circumstances" was it to be taken up in other sectors.