German union to expand strike

Politicians are asking if the strike will spark stoppages elsewhere in Europe

FRANKFURT, Germany -- Germany's biggest union says it will expand its strike action -- in its third day on Wednesday -- to the east of the country next week.

The giant 2.7-million member IG Metall union, which launched rolling, one-day strikes in Germany's industrial heartland of southern Baden-Wuerttemberg state on Monday, is now planning a second week of stoppages there.

Spokesman Claus Eilrich said strikes would also start in the eastern Berlin-Brandenburg region, where members have given overwhelming support to a walkout.

"Altogether IG Metall will call on over 10,000 union-organised workers in 25 firms in Berlin and Brandenburg to strike," the union said in a statement.

The escalation of the strike action comes amid mounting fears of a "knock-on" effect with industrial action spreading to other parts of Europe.

German machine tool maker Index Group, based in Esslingen, and industrial group Voith, in Heidenheim, were among new firms being targeted. Small and midsize firms account for the bulk of the country's jobs.

Chancellor Gerhard Schroeder urged the union and employers to resume wage talks broken off last month. Speaking at the opening of a new BMW plant in Leipzig, he expressed his "urgent wish" for a resumption as soon as possible.

Economists say a long strike, or a high wage settlement, could fuel unemployment and inflation just as Europe's largest economy emerges from recession -- though they concede a strike lasting only two weeks or so would do no lasting harm.

Wage talks collapsed when the union rejected the employers' offer of a 3.3 percent rise for 15 months, holding out for 4 percent for one year.

The union initially demanded 6.5 percent. In an interview on Wednesday with the Hanover-based Neue Presse daily, IGM second-in-command Juergen Peters, insisted it should get between 4 and 4.5 percent.

The union, which has over 800,000 members in the region, says it is trying to limit economic harm with a new "flexible strike" tactic, stopping work for one day at targeted companies.

The union says this minimises job losses and prevents layoffs at other plants for lack of parts or orders.

Whatever deal is done in Baden-Wuerttemberg is expected to set the pattern for wage settlements nationwide.

Concerns are meanwhile mounting that labour disruptions could spread to other parts of Europe.

Politicians and economists say wage demands by Germany's largest industrial union, IG Metall, could hurt Europe's already fragile economic recovery by boosting inflation and forcing more companies to cut costs -- leading to higher unemployment.

"If it became a widespread phenomenon in Europe it would be disruptive for European growth," according to Johnny Akerholm, the chairman of the European Union's Economic and Financial Committee.

With wages rising -- along with oil prices -- inflation appears to be a growing threat for European economies.

Last week, the ECB left its benchmark rate on hold at 3.25 percent but warned it would continue to monitor inflationary pressures. That prompted fears that rates could rise sooner than many have expected.