EON Employee Vote Paves Way for Strikes as Soon as Next Week

EON SE, Germany’s biggest utility, faces a walkout as early as next week that may curb power production after a majority of its unionized employees backed calls for a pay strike.

More than 90 percent of union members voted for the option to down tools indefinitely, the Industriegewerkschaft Bergbau, Chemie, Energie and Verdi unions said today at a press briefing in Hanover. That exceeded the 75 percent needed to proceed.

Unions have rejected a 1.7 percent pay offer from EON, demanding a raise of 6.5 percent. The Dusseldorf-based company and smaller competitor RWE AG (RWE) are saving costs, curbing spending and selling assets after Chancellor Angela Merkel ordered the shutdown of nuclear reactors by 2022 following Japan’s Fukushima disaster. Energy use has also weakened as economic growth slows.

“It’s up to the employer to find a solution before the strike starts,” said Erhard Ott, a board member of Verdi. “We want to hit the company and not the population.” Strikes are scheduled to start Monday, he said.

German power for next week rose for a third day, gaining as much as 2.1 percent to 40.75 euros a megawatt-hour, according to broker data compiled by Bloomberg. It traded at 40.50 euros as of 5:35 p.m. local time. EON added 0.2 percent to close at 12.83 euros in Frankfurt.

Possible Outcomes

An indefinite strike would be the first such stoppage in Germany’s energy industry since World War II. Past industry disputes in Germany indicate that a series of shorter stoppages at one or more sites are also possible outcomes.

“We urgently have to continue talking to each other and find a solution that prevents a strike,” EON board member Regine Stachelhaus said in an e-mailed statement. The company will do all it can to guarantee security of supply in the event of a walkout, she said.

Unions will inform the company in “a timely manner” of any likely disruption to power plants, they said at the briefing.

RWE, Germany’s second-biggest utility, is also facing a possible strike. A union bargaining committee is due to meet Tuesday to consider whether pay talks should be deemed a failure. That may lead to a strike ballot at the Essen-based company, which offered to raise pay by 1.5 percent for this year and 2014 and disburse two payments of 500 euros ($683). Unions demanded a 6 percent increase.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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