Nearly 100,000 metal and electrical workers went on strike across Germany yesterday in a pay dispute with employers.
Engineering union IG Metall is calling for wage hikes of up to 5.5 per cent for some 3.7 million workers from May and has so far rejected an offer from employers to increase wages by 2.3 per cent from July following two months without a raise.
Unions are pushing for inflation-beating wage hikes, confident politicians courting votes for a federal election due in September will back their demands. Annual inflation was running at 1.2 per cent in April, preliminary figures showed.
IG Metall and employers started a third round of negotiations in Baden-Wuerttemberg yesterday evening, but they were not expected to reach an agreement quickly.
"IG Metall would be well advised to agree on a moderate deal with us as quickly as possible as times will certainly not get better," said Rainer Dulger, head of employers' association Gesamtmetall.
Any deal reached in the state home to major carmakers such as Daimler and Porsche as well as manufacturers such as printing machine maker Heidelberger Druck would set the tone for wage hikes in the engineering sector nationwide.
Negotiations take place at a regional level before a deal made in one region is deemed a pilot agreement and generally adopted by the other regions.
Negotiations are due to restart in the southeastern state of Bavaria, where BMW has its headquarters, today.
Data shows Germany's private sector contracting, business and investor sentiment worsening, unemployment rising and engineering orders falling, although industrial orders and car sales have risen.
The union wants to vote on an unlimited strike if no agreement is reached by the Whitsun holiday, which takes place on May 19 to 20.
IG Metall head Berthold Huber said: "We only have just under 10 days left to reach an outcome at the negotiating table."
An agreement is not expected this week and further strikes are planned for Wednesday in Baden-Wuerttemberg, Bavaria and North Rhine-Westphalia.