Germany on standstill after largest strike in decades

BERLIN: Airports and bus and train stations across Germany were at a standstill on Monday, causing disruption for millions at the start of the working week during one of the largest walkouts in decades as Europe's biggest economy reels from inflation.

The 24-hour "warning" strikes called by the Verdi trade union and railway and transport union EVG were the latest in months of industrial action which has hit major European economies as higher food and energy prices dent living standards.

They kicked off three days of wage talks which could lead to further strikes if they fail to yield a compromise. Employers have offered 5% more wages over a period of 27 months and a one-off payment of 2,500 euros ù proposals unions, which are calling for double-digit hikes, call unacceptable amid soaring inflation which reached 9.3% in February.

Germany, which was heavily dependent on Russia for gas before the war in Ukraine, has been particularly hard hit by higher prices as it scrambled for new energy sources, with inflation rates exceeding the euro-area average in recent months.

Worsening chronic labour shortages give unions a strong negotiating hand, economists say. The walkout is the biggest in the consensus-oriented country with a long history of collective wage bargaining since 1992, according to Verdi.

"Employees are fed up with being fobbed off with warm words while work conditions get even worse and there are many vacant posts," Verdi Chief Frank Werneke told reporters.

The Airports Association ADV estimated that 380,000 air passengers were affected by flight suspensions including at two of Germany's largest airports in Munich and Frankfurt. In Frankfurt alone, almost 1,200 flights for 160,000 passengers were cancelled and stranded travellers slept on benches.

Rail services were also cancelled by railway operator Deutsche Bahn (DBN.UL). Striking workers wearing yellow or red high-visibility jackets blew horns, sirens and whistles, held up banners and waved flags during protests.

In Cologne, the lack of city trains prompted a dash for taxis.

"Millions of passengers who depend on buses and trains are suffering from this excessive, exaggerated strike," a Deutsche Bahn spokesperson said on Monday.

Verdi is negotiating on behalf of around 2.5 million employees in the public sector, including in public transport and at airports, while EVG negotiates for around 230,000 employees at Deutsche Bahn and bus companies.

Verdi is demanding a 10.5% wage increase, which would see pay rising by at least 500 euros ($538) per month, while EVG is asking for a 12% raise or at least 650 euros per month.

Stranded passengers expressed both sympathy and unhappiness about the strike action.

"Yes, it's justified but I for one never went on strike in my entire life and I have been working for more than 40 years. At the same time, in France they go on strike all the time about something," said passenger Lars Boehm.

Persistent cost pressures have pushed central banks to a series of interest rate increases, with policymakers urging Germany to avoid a destabilising price-wage spiral.

Fiscal squeeze

Sharp wage increases could squeeze the fiscal room for manoeuvre for Chancellor Olaf Scholz's government, making already fractious negotiations over the federal budget more difficult in his three-way coalition.

The interior ministry said the demands were equivalent to extra costs of 1.4 billion euros per year — and if that wage agreement were extended to other public sector workers as well as retired civil servants, judges and soldiers, it would equal 4.7 billion euros in total.

Employers are also warning that higher wages for transport workers would result in increased fares and taxes to make up the difference.

A government spokesperson on Monday said politics should stay out of the wage talks, while Interior Minister Nancy Faeser expressed confidence that a solution would be found this week.

More strikes

EVG chairman Martin Burkert warned further strikes were possible, including over the Easter holiday period.

"We have been dragged along here for too long. The big ones benefit and the small ones, who keep everything running, get nothing," said striking worker Christoph Gerschner. "People have second or third jobs to make ends meet."

If independent mediation also yielded no result, "then the situation will get very dark in Germany", warned Ulrich Silberbach, head of the German Civil Service Association (DBB). "Then we will have to launch an indefinite, nationwide industrial action."

The union strife still pales in comparison with protests against President Emmanuel Macron's pension reforms in neighbouring France which have sparked the worst street violence in years.

Commerzbank Chief Economist Joerg Kraemer said the economic impact of Monday's strike on Germany's 181-million-euro ($194-million)-a-day transport sector was limited so far but this could change if the strikes persisted over a longer time.

"The losses are likely to be limited to the transportation industry because factories will continue to operate and many employees will be working from home."

The head of the Bundesbank, Joachim Nagel, said last week Germany needed to avoid a destabilising price-wage spiral, which he had not so far observed

"To be clear: Preventing inflation to become persistent via the labour market requires that employees accept sensible wage gains and that firms accept sensible profit margins," he said.

($1 = 0.9293 euros)