No More Strikes

Deutsche Bahn agreed to make a one-time payment of 800 euros ($1,182) before raising wages by 8 percent by March 2008, GDL Chief Manfred Schell said at a press conference in Frankfurt on Sunday, Jan. 13.

Pay will be further raised to 11 percent in September. Deutsche Bahn also agreed to cut the workweek to 40 hours from 41 hours starting in February 2009.

"It's a good result with which we can live well,'' Schell said, adding he was optimistic about settling the final details of the wage contract which will expire at the end of January 2009.

He added that the union had unanimously voted Sunday to halt preparations for more stoppages that would have choked Deutsche Bahn's passenger and freight services across the country.

This meant "with a likelihood of 99 percent," there would be no more strikes, he said.

"Good news for German economy"

The GDL had been threatening to the last to resume strikes, prompting the government of Chancellor Angela Merkel to mediate in the dispute, although it normally leaves the state-owned railways company to run itself.

The pay deal is expected to bring relief to Germany, which has seen massive disruptions of cargo and passenger traffic as a result of work stoppages in the past months, costing Europe's largest economy millions of euros. Neighboring European countries were also hit by the strike.

German Transport Minister Wolfgang Tiefensee called the agreement of "eminent importance to the German economy.''

Economics expert Hans-Werner Sinn said the deal between Deutsche Bahn and the GDL was positive.

"The end of the awful row is good news for Germany's economy," he told the Bild newspaper.

Breaking ranks

The bitter labor dispute erupted 10 months ago when Schell's GDL union demanded a raise of as much as 31 percent for some 20,000 train drivers and 10,000 ticketing staff, saying they were paid miserably. Train drivers in Germany earn about 1,500 euros a month after taxes, less than their counterparts in neighboring France and Switzerland, according to the union.

GDL's demands represented a challenge to Germany's trade-union solidarity and the unraveling of a system based on umbrella labor contracts for whole industries or firms.

Companies fear the settlement may encourage other German unions to step up pay claims amid widespread sentiment that labor has missed out during Germany's economic recovery. Commentators have said in the past that gains for the drivers would trigger claims by other workers at the company, leading to increases in German passenger fares and freight charges.

Deutsche Bahn reached a deal in November with the 135,000 workers in the Transnet and GDBA unions to increase their salaries by 10 percent through 2010.

Public sector strikes loom

Even as Germany's long-running acrimonious pay dispute between Deutsche Bahn and train drivers may finally be over, representatives of about 1.3 million public sector workers are also warning of industrial action to back up their push for a 8-percent pay rise.

But economists warn that a big hike in wages could place at risk Germany's recent economic success, which resulted in growth climbing to 2.9 percent in 2006, and which to an extent was based on the nation's improved competitiveness resulting from the long run of stagnating wages.