Steel Industry Deal

Germany's largest union, which includes 2.3 million members, managed to secure a wage increase of 5.2 percent from March for the next 13 months. In addition, the IG Metall union negotiated that employers are to make a one-time payment of 200 euros ($290) for the month of February.

The deal is a major wage agreement and is seen as providing a framework for upcoming talks for some 8,000 steelworkers in the eastern German steel industry and talks in the western state of Saarland later in the year.

Wednesday's agreement affects manufacturers in the core steelmaking states of North Rhine-Westphalia, Lower Saxony and Bremen, along with related plants in other states.

IG Metall negotiating chief Oliver Burkhard was pleased with the outcome, with the wage increase the highest in the sector in 15 years. The union had entered negotiations with a demand of eight percent.

Government pleased

Employers' negotiator Helmut Koch acknowledged that the major German steelmakers had compromised for fear of strikes. Warning strikes earlier this month saw 39,000 employees halt work.

"A widespread strike would have had devastating consequences for companies and the economy," Koch told DPA news service.

Federal Labor Minister Olaf Scholz welcomed the deal. Speaking to German public broadcasters, however, Scholz said the government would not comment on the exact details of the wage agreements.

Given the two years of solid growth in 2006 and 2007 in Germany, workers were likely entitled to substantial rises after years of restraint.

IG Metall was not able to secure its demand for a shorter working week for older workers, but IG Metall chief Burkhard said the issue would remain on the table for the future.