German Engineers Agree To Pay, Job Security Deal

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Germany's largest union and northern employers agreed a two-year pay deal on Thursday that provides job guarantees and a pay increase for millions of workers in the metal and electrical industry.

The agreement between IG Metall, the largest labor union in Germany, and engineering employers in North Rhine-Westphalia state foresees a one-off payment of EUR 320 to all skilled workers and EUR 120 to trainees for the period between May 2010 and April 2011. In April 2011, a 2.7% pay increase will come into effect. The wage agreement runs through to March 2012.

Berthold Huber, the first chairman of IG Metall, said the outcome of the deal was good. Business leaders, trade unions and politicians reportedly welcomed the deal.

"The metalworking and electrical industry is taking another step on the way to more flexible production in Germany," Commerzbank's Eckart Tuchtfeld said in a note. According to the analyst, the other districts will probably take over because it fulfills demands put forward by the employers as well as the trade union.

IG Metall and the engineering employers reached a deal after 15 hours of negotiations. The engineering sector deal comes at a time when the country's public sector employees started a strike this month claiming a 5% rise in pay. They have been told to adjust their demand given the mounting public debt.

(Market News Provided by RTTNews)