German industrial workers to get pay raises in 2-year deal

Nov 18, 2022, 1:05 AM | Updated: 1:51 am
FILE -- An employee in protective clothing takes a sample from the furnace at the steel producer, S...

FILE -- An employee in protective clothing takes a sample from the furnace at the steel producer, Salzgitter AG, in Salzgitter, Germany, Thursday, March 22, 2018. Germany's biggest industrial union has agreed with employers on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of sky-high inflation. (AP Photo/Markus Schreiber,file)

(AP Photo/Markus Schreiber,file)

BERLIN (AP) — Germany’s biggest industrial union agreed with employers Friday on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of sky-high inflation.

The IG Metall union and employers reached a compromise in the southwestern state of Baden-Wuerttemberg, a key industrial region. In Germany, wage deals are typically hammered out in negotiations between employers’ organizations and unions that cover a whole sector, and an agreement reached in one region is generally applied nationwide.

IG Metall negotiates for workers in the auto and machinery industries among others, representing a total of more than 3.8 million workers.

The union initially demanded an 8% pay increase and a one-year deal. It first made the demand in early July; since then, Germany’s annual inflation rate has risen from 7.6% to 10.4%.

In their fifth round of talks, both sides agreed to raises of 5.2% next June and another 3.3% in May 2024. On top of that, workers will get one-time payments of 1,500 euros ($1,550) each at the beginning of 2023 and another 1,500 euros a year later.

German Chancellor OIaf Scholz, who has sought to find ways with unions and employers to address the impact of rising prices while preventing an inflationary spiral, has been keen to promote such tax-free payments of up to 3,000 euros.

“We have succeeded in an extremely challenging time in appreciably unburdening employees, sustainably stabilizing incomes and strengthening purchasing power,” IG Metall Chairman Joerg Hofmann said in a statement. He argued the agreement would strengthen the German economy, which is expected to shrink next year.

The chief negotiator for employers’ association Suedwestmetall, Harald Marquardt, said the outcome was acceptable but “certainly painful in many points and absolutely at the limit of what the majority of our members think is sustainable.” He said employers agreed partly because of the need to head off strikes in an already uncertain situation, and the deal offers calm for what are likely to be two difficult years.

Wage deals in Germany, Europe’s biggest economy, are being watched as inflation flares across the 19-nation euro area and the European Central Bank raises interest rates rapidly in an effort to tame it. ING economist Carsten Brzeski said Friday’s outcome “shows what a compromise can look like.”

“It won’t be enough to fully offset the drop in purchasing power caused by higher inflation, but it softens the damage,” Brzeski said in a research note. “For the ECB, it signals that second-round effects remain dampened and that a lower, subdued inflationary pressure can last for longer than markets currently think.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


FILE - In this Monday, Nov. 2, 2015 file photo, the first twin-engine 158-seater C919 passenger pla...
Associated Press

Chinese airline receives first domestic long-range jetliner

BEIJING (AP) — A Chinese airline on Friday became the first customer to take delivery of a long-range jetliner produced by a state-owned manufacturer set up to try to compete with Boeing and Airbus, state TV reported. The Commercial Aircraft Corp. of China’s C919 is part of the ruling Communist Party effort’s to transform the […]
3 hours ago
Associated Press

Spain hosts EU-Med summit to discuss energy crisis

MADRID (AP) — The leaders of nine Mediterranean and Southern European countries planned to meet Friday in Spain, with the energy crisis triggered by the Russian invasion of Ukraine likely to top the agenda. The EU-Med9 meeting in the eastern port city of Alicante brings together the leaders of Spain, Portugal, France, Italy, Greece, Malta, […]
3 hours ago
Medical workers in protective overalls walk past a line outside the fever clinic of a hospital in B...
Associated Press

China struggles with COVID infections after controls ease

BEIJING (AP) — A rash of COVID-19 cases in schools and businesses were reported by social media users Friday in areas across China after the ruling Communist Party loosened anti-virus rules as it tries to reverse a deepening economic slump. Official data showed a fall in new cases, but those no longer cover big parts […]
3 hours ago
FILE - Ukraine Finance Minister Serhiy Marchenko walks outside of the International Monetary Fund (...
Associated Press

Helping Ukraine is ‘self-preservation,’ finance chief says

FRANKFURT, Germany (AP) — Ukraine’s finance minister says crucial Western financial support is “not charity” but “self-preservation” in the fight to defend democracy as his country deals with growing costs to repair electrical and heating infrastructure wrecked by Russian attacks. Serhiy Marchenko also told The Associated Press in an interview Thursday from Kyiv that he […]
3 hours ago
People walk by monitors showing an exchange rate of the Japanese yen against the U.S. dollar at a s...
Associated Press

World shares higher ahead of U.S. inflation update

BANGKOK (AP) — Shares were higher in Europe and Asia ahead of an update Friday on U.S. wholesale prices that will provide insights into how businesses are coping with inflation. Germany’s DAX added 0.2% to 14,295.30 while the CAC 40 in Paris was nearly unchanged at 6,649.30. Britain’s FTSE 100 also was little changed, gaining […]
3 hours ago
A general view of pupils during lunch hour at Hillstone Primary School, in Birmingham, England, Wed...
Associated Press

UK cost-of-living woes stir push for more free school meals

BIRMINGHAM, England (AP) — As the school bell rings, dozens of children begin filing into the canteen at Hillstone Primary School. The day’s offering, a roast dinner, is a popular one, and many are eager to tuck into their plates of turkey slices, roasted potatoes, broccoli and gravy. For some children in this area of […]
3 hours ago

Sponsored Articles

Quantum Fiber

How high-speed fiber internet edges out cable for everyday use

In a world where technology drives so much of our daily lives, a lack of high-speed internet can be a major issue.

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
German industrial workers to get pay raises in 2-year deal