Strikes averted - good or bad news?

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The Story

It is the sort of news that you pay particular attention to as a journalist at times like this. For the past few weeks Germany’s most powerful trade union, IG Metall, has been calling on its members to down tools in a wage dispute with employers.

But on Friday evening, the two sides reached a compromise agreement.

IG Metall represents close to four million workers in the car industry and other ‘metal based’ companies that make up the back bone of the German economy.

By the end of last week, close to a million workers had already gone on strike. And the union was threatening to escalate their industrial action if their demands weren’t met.

Prolonged strikes at a time when the economy is already taking on water would have threatened to deepen the recession which economists are forecasting for next year.

On the other hand, the unions’ demand of wage rises to compensate for inflation risks making the inflation problem worse: it will add to the strain placed on companies’ ba…