Largest strike in decades brings Germany to a standstill

By Klaus Lauer and Tom Sims, BERLIN/FRANKFURT, March 27: Airports and bus and train stations across Germany were at a standstill on Monday morning, 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 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.

Two of Germany’s largest airports, Munich and Frankfurt, suspended flights, while long-distance rail services were cancelled by rail operator Deutsche Bahn (DBN.UL). Striking workers wearing red high-visibility jackets blew horns and whistles through an empty Munich train station.

Employees are pressing for higher wages to blunt the effects of 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.

Persistent cost pressures have pushed central banks to a series of interest rate increases, though policymakers have said it is too early to talk of a price-wage spiral.

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

In the hours running up to the strike, both sides dug in their heels, with union bosses warning that considerable pay hikes were a “matter of survival” for thousands of workers.

“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 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.

FURTHER STRIKES

EVG chairman Martin Burkert told the Augsburger Allgemeine newspaper on Monday that employers had not yet made a viable offer and warned that further strikes were possible, including over the Easter holiday period.

Deutsche Bahn on Sunday said the strike was “completely excessive, groundless and unnecessary”, and employers are warning that higher wages for transport workers would result in higher fares and taxes to make up the difference.

Monday’s walkouts are part of waves of disruptive labour strikes in wealthy European countries in recent months including in France and Britain, where hundreds of thousands of transport, health and education workers are pressing for higher wages.

Protests against President Emmanuel Macron’s pension reforms have sparked the worst street violence in years in France.

Commerzbank Chief Economist Joerg Kraemer said the economic impact of Monday’s strike was limited so far but this could change if the strikes persisted over a longer time.

“The strike will strain people’s nerves,” he said. “But economically, 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 price-wage spiral.

“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.

“Despite signs of second-round effects, we have not observed a destabilising price-wage spiral in Germany so far.”

Reuters