50,000 down tools in German strike

FRANKFURT, Germany -- About 50,000 workers from Germany's largest indistrial union, IG Metall, have launched the country's first major strike in seven years over pay issues.

Carmakers are being hit hard by the rotating strikes in Baden-Wuerttemberg, with workers in the southwestern part of the country trading in their tools for protest signs.

Wage talks between employers and union representatives broke down last month. Economists are warning that a series of continued strikes could undermine economic recovery in the country.

A prolonged dispute could also have knock-on effects for Germany's trading partners and Chancellor Gerhard Schroeder's bid to win a second term in office in elections to be held on September 22.

Baden-Wuerttemberg is home to DaimlerChrysler's Stuttgart headquarters and its main Mercedes-Benz car plant in the nearby town of Sindelfingen. Other car factories likely to be affected are Porsche and Audi.

MORE STORIES Q&A: Background to the strike

Workers are expected to strike at a total of about 70 plants in Baden-Wuerttemberg this week and are likely to be followed next week by union workers in the capital Berlin and the eastern state of Brandenburg that surrounds it.

Workers in other regions are also expected to stage demonstrations to support the strikers.

IG Metall has 2.8 million members and another 800,000 engineering workers would benefit from any deal it secures with employers.

Several hundred workers gathered outside the Porsche plant in Stuttgart waving red-and-yellow IG Metall flags and placards with slogans like "Fair pay for good work." It is the first strike at Porsche since 1984.

The union initially demanded a pay rise of 6.5 percent before lowering that claim to around four percent during failed negotiations with employers last month, who originally proposed a two percent pay rise.

Unions were then offered a 3.3 percent pay rise over 15 months plus a one-time payment of 190 euros ($175) without agreement.

Union leaders say workers deserve significantly more than inflation because a moderate deal reached two years ago was eroded by higher prices.

After the talks collapsed Hans Werner Busch, head of Gesamtmetall, the engineering employers group, called the result "not surprising, but very disappointing nonetheless."

IG Metall head Klaus Zwickel pressed home the union's demands during a rally outside the Porsche factory on Monday. He said: "We're not striking against Schroeder or against anybody else, but to get a fair result and we'll keep it going as long as we need."

Analysts say a deal of significantly more than 3.5 percent in the highly productive engineering sector would ring alarm bells at the European Central Bank, ECB, which has repeatedly singled out wages as one of the major risks to growth and stable prices.