German unions win pay battle: Move towards east-west parity confirmed

GERMAN unions yesterday declared themselves 'very happy' with a deal by which eastern German industrial workers will receive a 22 per cent wage rise by the end of this year, thus belatedly restoring a partial version of the wage deal agreed between employers and unions in 1991. Employers had wanted to tear up the old agreement entirely. A spokesman for the employers admitted yesterday that this had been a 'painful compromise'.

A deal was finally struck at lunchtime yesterday after talks that went on through the night. Most importantly for the unions, the agreement reinstates the concept of a wage contract, working towards parity of wages in west and east by 1996, two years later than originally agreed. But the unions are pleased that the contract idea remains valid.

Both sides have made concessions. But it is the employers who have given way on the most important issues. They had insisted that they could only afford a 9 per cent rise this year, instead of the promised 26 per cent. Now, however, under a complex deal, a backdated 22 per cent pay rise dips to a 15 per cent pay rise before rising again in stages to 22 per cent in December. (The missing 4 per cent is accounted for by Christmas and holiday money, which is excluded.) Exceptions will only be made for firms acknowledged to be financially precarious.

Theoretically, yesterday's deal applies only to the region of Saxony. In practice a version of the deal is certain to be adopted in the other striking regions, too. Both union members and employers praised the key role played by the widely-respected Prime Minister of Saxony, Kurt Biedenkopf.

The employers - and by extension the government - found themselves between a rock and a hard place. The mood in the east in past weeks has been angrier than many in the west have been ready to acknowledge. If the employers refused concessions then the strikes seemed likely only to get worse. Union leaders argued, too, that to crush the strike - and thus increase the resentments - would be politically risky, since there are federal elections next year.

Equally, however, yesterday's agreement to pay most of what was originally promised back in the almost-optimistic days of 1991 may create as many problems as it solves. The employers' argument was, until yesterday, that the east would price itself out of an already difficult market if its wages were raised too quickly to western levels. The employers' slogan warned workers: 'Don't saw off the branch that we are all sitting on.'