IG Metall Wins 5.6 Percent Pay Increase in Bavaria

IG Metall, Germany’s biggest union, won a pay deal in the state of Bavaria that exceeds the rate of inflation, setting a benchmark for a national accord.

In talks ending early today, the union and the Gesamtmetall employers group agreed to a 5.6 percent pay increase over 20 months for the region’s 770,000 workers. Prices will rise less than 2 percent in 2013 and 2014, according to forecasts compiled by Bloomberg. IG Metall has demanded a 5.5 percent one-year increase for its 3.7 million members nationwide.

The terms, raising pay at companies including Siemens AG (SIE) and carmaker Bayerische Motoren Werke AG (BMW), were “far-sighted and fair,” Gesamtmetall’s President Rainer Dulger said in a e-mailed statement. Negotiators brushed aside “dusty ritual to broker an accord at record speed,” the statement added.

Higher incomes may help Chancellor Angela Merkel and Bavarian Prime Minister Horst Seehofer in an election year. Bavaria goes to the polls in a regional vote one week before the nation in September.

The union stepped up selective action this week in support of its pay claim including stoppages by 130,000 workers at 600 businesses yesterday. Amid weak economic growth, IG Metall and employers will take account of industry’s regional strengths and weaknesses in weighing a national accord.

Germany’s economy grew just 0.1 percent in the first quarter, the Federal Statistics Office said today. The economy of the euro area, Germany’s biggest export destination, is slated contract for the second consecutive year in 2013. Private consumption may grow by just 0.6 percent this year, the Economy Ministry said on April 25.

IG Metall Workers in the state will be paid 3.4 percent more pay from July 1 this year and 2.2 percent more from May 1, 2014, the union said. The accord will expire in December next year.

Unemployment in Bavaria in April fell to 3.9 percent. Germany as a whole reported an average rate of unemployment of 7.1 percent last month.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.