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A Metalworkers' Strike May Brake German Recovery

FACED with a looming strike by Germany's biggest trade union, government leaders are urging restraint, saying a prolonged labor dispute could have serious consequences for the German economy.

The 2.6-million-member IG Metall union began a strike ballot in the southern region of Bavaria on Feb. 20. The balloting was to continue until Feb. 22. If 75 percent of the 165,000 workers polled approve a work stoppage, the union could strike at selected factories as early as Feb. 24. Bavaria is home to such major employers as Daimler-Benz, Bosch, Audi, and the BMW automaker.

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The electrical and metalworkers' union covers Germany's largest export-related industrial sector. That has prompted Finance Minister Theo Waigel to warn that a strike would be ``poison'' for the German economy. Last year Germany emerged from its most serious post-World War II recession to post 2.8 percent growth.

Germany is widely seen as the economic engine of Europe. Its economic recovery is projected to strengthen in 1995 with 3 percent growth. But the last major IG Metall strike in 1984 knocked an estimated half a percent off yearly growth.

Cheaper labor elsewhere

Chancellor Helmut Kohl says it is critical for German competitiveness that IG Metall and the employers' association, known as Gesamtmetall, reach agreement. Bonn is facing increasing pressure from the formerly communist nations of Central Europe, where labor costs are a fraction of those in Germany. The only way Germany can stay ahead of the competition, Mr. Kohl says, is for labor and management to maintain harmonious relations.

But so far, both sides have refused to budge in negotiations. The union, citing the recovery, is demanding a 6 percent pay raise. The employers refuse to make a counter offer, saying the union must first be willing to discuss cost-cutting measures, including the reversal of a previous commitment to introduce a 35-hour workweek starting Oct. 1.

The union has reacted testily to additional cost-cutting attempts. After accepting wage deals that failed to keep pace with inflation the last four years, union leaders say it's time the employers shared a bigger percentage of the profits.

Despite the seemingly intractable nature of the dispute, many German economists expect a serious work stoppage will be avoided, adding that the final settlement will likely include a wage hike of about 3 percent.

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Best growth strategy

Underlying the strike threat is a difference of opinion on the overall soundness of the German economy, as well as the best strategy to ensure continued growth. The government and the Bundesbank, the German central bank, have trumpeted the robust nature of the recovery. Yet the employers demand to reopen cost-cutting discussions is an indication of lingering economic instability.

``There are still weak spots in investment goods and private consumption,'' said Rudolf Scharping, leader of the main opposition Social Democrats. ``If the economy is supposed to develop over the long term, we must deal with these weaknesses.''

IG Metall maintains that a 6 percent wage increase would give a boost to the recovery by stimulating consumption. Employers insist that substantial wage hikes, combined with a failure to cut more costs, would result in more layoffs.

Both Mr. Scharping and some leading economists, however, blame the Kohl government for fostering the labor strife that it now bemoans. They point back to the political campaign of last October, saying Kohl purposely inflated economic expectations to help his reelection chances.

``The structural crisis of German industry is not, and was not, simply a figment of the imagination,'' said a report by the German Industry Federation, published during the campaign.

``All these things [economic weaknesses] were hidden before the Oct. 16 election so that the expectation would be that the recovery is stable,'' Scharping added. ``But that is unfortunately not the case.''

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