IG Metall, Germany's largest trade union, struck a deal March 28 with the bosses in North Rhine-Westphalia state, agreeing to a meager 3 percent wage increase starting May 1, followed by a 2.1 percent raise the following year. The union represents 3.4 million workers and has traditionally set the pace in industrial agreements.

Its officials had demanded a 5.5 percent pay raise, as well the lowering of the retirement age from 65 to 60, with full benefits. Instead, the agreement allows 57-year-old workers to become part-time at 70 percent of pay, then to stop reporting to work at age 60 while remaining on the payroll through age 63.

In addition, the employers cheered a clause that fixes the workweek at 35 hours until 2003. The union has sought a 32-hour week. "We have industrial peace in the metal industry for three years," said Werner Stumpfe, the leader of the Gesamtmetall industry federation.

The government and the bosses have welcomed the pact and treated it as a victory. Martin Leutz, a spokesman for Gesamtmetall, said the union was waking up to the new economic era. "It looks like they finally caught on with what needs to be done," he said. "They are finally facing reality." Chancellor Gerhard Schroeder was also pleased with the results.

The union's strong stance for setting the pace in labor demands was eroded after another, smaller, union, the IG BCE chemical workers, settled for low wage hikes. Formed last year, the chemicals and energy workers union is a merger of three smaller organizations and has 950,000 members.

The new contract covers 580,000 chemical workers and includes a wage increase of only 2.2 percent. The bosses are using this settlement to undermine union strength in the metal industry and to set a precedent for other labor sectors.

The main German railway union is facing threats from Deutsche Bahn AG to downsize and increase production. After threatening strikes last week, the union backed away from this course of action. Claiming losses of $85 million last year, the bosses announced plans to cut 252,000 jobs in the next four years and add $1.8 billion to its coffers.

The public sector union, with 1.9 million members, is next in upcoming labor talks. One of its leaders, Herbert Mai, expects a very difficult time in negotiations with the bosses.  
 
 
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