A recession is looming due to high energy costs for companies - and at the same time IG Metall is opening up a difficult wage conflict in the core sectors of industry.

"It is five to twelve.

The inflationary pressure is enormous, the employees finally need a noticeable relief in their wallets," said Thorsten Gröger, IG Metall district manager for Lower Saxony, at the beginning of his negotiations with employers in the region.

The union is taking action with its demand for an 8 percent wage increase, which was decided in early summer.

Dietrich Creutzburg

Business correspondent in Berlin.

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Lower Saxony thus made the nationwide start to the new wage round in the metal and electrical industry.

In total, it affects 3.8 million employees.

Talks in the large districts of Baden-Württemberg, Bavaria and North Rhine-Westphalia will begin later this week.

The metal and electrical industry includes car manufacturers and suppliers, for example, but also mechanical engineering, iron foundries and medical technology manufacturers.

Overall, the economic sector recently had a turnover of around 1.1 trillion euros.

At a demonstration in Leipzig, its chairman Jörg Hofmann had already made it clear that IG Metall, despite fears of a recession, is not prepared to be modest: "Now is not the time for restraint, now is the time for a substantial increase in wages and training allowances by 8 percent,” he explained.

Even during the pandemic, the metal workers had shown “responsibility and solidarity” with the companies in the form of wage restraint.

"Now that the stress is constantly increasing - in the supermarket, at the petrol pump, in the pub, should the colleagues duck their heads and exercise modesty?" They wouldn't do that.

"Far from the current realities"

For the Bavarian metalworking employers' associations, the general manager, Bertram Brossardt, called the 8 percent requirement "not appropriate to the situation and far removed from current realities".

He referred to an "unprecedented mix of serious crises" - from extremely rising energy and raw material prices to material and personnel shortages to the ongoing smoldering pandemic.

Everyone involved would have to be careful not to “endanger the prosperity of the past decades”.

According to a survey by metalworkers in Bavaria, 22 percent of companies there expect production to stop if they run out of gas.

30 percent already see their production severely affected by a lack of materials.

At the same time, Brossardt countered the union's claim that the metallers had not received any significant wage increases for years.

"Since 2018, collective wages have increased by a total of 9.3 percent," he emphasized.

At that time, there was initially an increase of 4.3 percent.

The monthly wages were in fact not increased further in the later wage rounds.

However, the collective bargaining parties introduced new one-off payments due annually in several steps – totaling around two-thirds of an additional monthly salary.

And with wages averaging 65,280 euros per year, the metalworkers in Bavaria are clearly at the top level.

However, the employers also admit that not all companies are doing equally badly: depending on whether they receive enough material in their field of business and to what extent they can pass on price increases, the range is particularly large this time.

"We need flexible solutions for the high level of uncertainty and the heterogeneous situation," Brossardt derived from this as a mandate for collective bargaining policy.

However, he also emphasized that the aim of the metalworking employers is to reach a “balanced” collective bargaining agreement quickly, despite all the uncertainties.

In October, the collective bargaining partners in the chemical and pharmaceutical industries will then resume their wage negotiations.

They postponed this in April under the impression of the great uncertainty caused by Putin's attack on Ukraine.

To a certain extent as a down payment on the regular wage agreement that is now being sought, the employers and the IG Bergbau, Chemie, Energie (IG BCE) had agreed on a one-time payment of a uniform 1,400 euros for all 580,000 employees.

In the wage conflict between Lufthansa and its pilots, which has been going on for some time, there is now at least a preliminary agreement that will save customers from new pilot strikes until mid-2023.

As both sides announced on Monday, the basic salaries of the cockpit crews will be increased in two stages by 490 euros each.